Performance Commentary

Backdrop 

The S&P 500 Index gained 8.11% in the third quarter of 2025, a continuation of the strong second quarter performance. The index notched 23 new all-time highs in the quarter. Continued strength in technology, Artificial Intelligence (AI), and mega-cap growth stocks remained the primary drivers of the index’s quarterly gains, but market breadth improved during the quarter. Growth stocks continued to outpace value, supported by strong gains in technology, communication services, and consumer discretionary sectors. AI-related companies continued to pace equities, as elevated capital spending on data centers, semiconductors, and cloud infrastructure drove earnings growth and investor enthusiasm throughout the quarter. The healthcare sector remained under pressure as growing policy uncertainty out of Washington weighed on investor sentiment.  

The quarter opened with lingering uncertainty around trade policy as the expiration of the 90-day tariff pause approached. However, the deadline passed without disruption, and the administration subsequently announced a flurry of trade deals and preliminary agreements aimed at reducing tariffs and easing tensions with key partners. The progress on trade policy helped restore confidence among investors and businesses alike, reinforcing the broader sense of economic stability that underpinned the market’s advance. The U.S. Dollar Spot Index posted a slight gain for the quarter, providing some relief from the slide in the first half of the year. Small capitalization stocks outperformed their larger counterparts, driven by an end of the quarter rally after the Federal Reserve Open Market Committee (FOMC) reduced the federal funds target rate range to 4.00%-4.25% at their September meeting. The central bank’s resumption of its easing cycle came on the back of a series of weaker labor market data readings.  

International equities have continued their strong year. The MSCI EAFE Index gained 4.89% in the third quarter and has returned 25.83% year-to-date. Emerging growth stocks outperformed both domestic and international developed markets, and the MSCI Emerging Markets Index returned 10.92% in the quarter and has gained 28.17% year-to-date. World equity markets rallied as easing trade tensions and clearer policy direction marked a notable improvement from the uncertainty that characterized the first half of the year.  

In fixed income markets, interest rates declined across the yield curve. The 2-year treasury fell from 3.72% at the quarter’s start to 3.61% by its end, while the 10-year yield started the period at 4.23% and ended the third quarter at 4.15%. Credit spreads continued to tighten in the quarter, signaling healthy corporate balance sheets and strong economic growth. Amid these falling rates, bonds had positive price movement across the board. Municipal and taxable bonds both posted similarly positive performance, and investment-grade bonds had a strong third-quarter showing in both areas. 

Large‑Cap Tilt and Short‑Duration Credit Drive One‑Year Performance for SoFi, SigFig, and Vanguard Digital Advisor 

SoFi, SigFig, and Vanguard Digital Advisor finished the past twelve months at the top of the robo-advisor performance rankings. Each leaned heavily into large-cap, growth-oriented U.S. equities, an approach that paid off in a year dominated by mega-caps and resilient consumer spending despite a softer macro backdrop. 

Despite softer economic signals elsewhere, large-caps again outpaced smaller names. The Russell 1000 Index returned 17.72%, far ahead of the Russell 2000 Index’s 10.74% gain. SoFi devoted 81% of its equity sleeve to large-cap stocks, well above the 69% peer average. SigFig and Vanguard Digital Advisor held 75% and 74% large caps, respectively, capturing this year’s rally in large-cap, and especially, mega-cap, stocks. 

Growth stocks handedly beat value, fueled by enthusiasm around AI and other technology themes. This is shown  Russell 3000 Growth Index climbed 24.78%, greatly outpacing the Russell 3000 Value Index’s 9.30% rise. SoFi allocated 35% of equities to growth, SigFig 28%, and Vanguard Digital Advisor 26%, which are all above the average of 25%. Their tilt toward technology and communication-services names benefited from investor enthusiasm around artificial-intelligence themes. 

U.S. stocks maintained their edge over developed peers even as emerging markets held their own. The S&P 500 Index advanced 17.56%, topping the MSCI EAFE Index’s 15.70% return, while the MSCI Emerging Markets Index gained 18.14%. SoFi had 77%, Vanguard had 69%, and SigFig had 60% of equity assets in the United States. 

On the fixed-income front, high-yield corporates delivered 7.41%, comfortably ahead of the Bloomberg US Aggregate’s 2.88% and municipal bonds’ 1.39%, while short- and intermediate-term investment-grade corporates returned 4.90% and 5.08%, respectively. Axos Invest, by allocating 10% to high yield, double the 5% peer average, and keeping duration at 5.7 years, topped the bond leaderboard. Meanwhile, Stash Smart Portfolio and E*Trade Core each combined below-average high-yield stakes with conservative duration profiles to balance yield and risk. 

Domestic Equities and Selective Credit Fuel Three-Year Results for SoFi, Betterment Climate Impact SRI, and Fidelity Go 

Over the past three years, the same strategic positioning that drove one-year success proved even more rewarding over extended periods. SoFi, Betterment Climate Impact SRI, and Fidelity Go delivered the strongest total returns in the robo-advisor universe against their normalized benchmarks, with each portfolio pairing overweight large-cap U.S. positions with bond sleeves emphasizing municipals or blended high-yield credit. 

The domestic equity advantage became more pronounced over this timeframe. The S&P 500 returned an annualized 24.88%, edging past the MSCI EAFE’s 22.45% and the MSCI Emerging Markets Index’s 18.76%. As noted previously, SoFi’s 77% allocation positioned it well, while Fidelity Go 70% and Betterment Climate Impact SRI’s 64%, were well above the 68% peer norm. 

Large-cap dominance persisted with even greater separation. The Russell 1000 Index earned an annualized 24.59% versus the Russell 2000’s 15.16% return. SoFi and Betterment each committed 81% large-cap exposure, while Fidelity Go held 76%, above the average robo allocation sat near 70% for this period. Keeping small-cap stakes in the low-teens avoided the heightened volatility that continued to weigh on smaller companies. 

The growth premium expanded significantly over three years. The Russell 3000 Growth Index’s annualized 30.71% return versus 16.71% for value represented a much wider spread than the one-year period. SoFi’s 35% growth stake, well ahead of the 26% peer average, proved particularly advantageous, while Betterment Climate Impact SRI’s 27% and Fidelity Go’s 25% allocations also benefited from the resilience of large-cap growth franchises. 

Within fixed income, corporate bonds outpaced municipals, with the Bloomberg US Corporate Bond Index returning an annualized 7.07% compared to the Bloomberg Municipal Bond Index’s 4.73%. High yield bonds also outperformed investment grade corporates, as the Bloomberg US Corporate High Yield Index returned an annualized 11.08%, well above the investment grade corporate return annualized return. This substantial performance gap demonstrated the premium offered by lower-quality issuers. Empower (Personal Capital) led all fixed-income performers with a 6.7% high-yield allocation and a 5.9 duration. Axos Invest followed with a 10.3% high-yield stake and a 5.7 duration, while Betterment Climate Impact SRI had a 5.7% high-yield allocation. SoFi and Fidelity Go relied predominantly on high-grade municipals and, although munis lagged corporates, their steady positive returns complemented the outsized equity gains that ultimately drove these portfolios to the top of the three-year leaderboard. 

Domestic Equity Tilt and Selective Credit Propel Eight-Year Results for SoFi, Fidelity Go, and Wealthfront 

Extending the analysis to eight years reveals how sustained strategic positioning compounds performance advantages. SoFi maintained its leadership position alongside Fidelity Go and Wealthfront, with all three demonstrating that consistent domestic large-cap equity overweights paired with selective credit exposure can drive superior long-term results across multiple market cycles. 

The U.S. equity premium reached its most dramatic levels over this extended period, with domestic stocks delivering 14.85% annualized returns, nearly double the MSCI EAFE’s 7.75% and well above emerging markets’ 5.69%. SoFi’s unwavering 77% U.S. allocation, established in earlier periods, captured the bulk of this persistent outperformance alongside Fidelity Go (70%) and Wealthfront (73%), and all were about the 67% peer average. 

Large-cap superiority became even more entrenched, with the Russell 1000’s 14.59% annual return, far surpassing the Russell 2000’s 7.75% return. SoFi devoted 81% of its equity sleeve to large-caps, Fidelity Go 76%, and Wealthfront 72%, versus a 71% peer norm. Their limited small-cap stakes (3-7%) shielded performance from the greater volatility and weaker earnings that persisted among smaller companies throughout the period. 

Growth outperformed value by a wide margin. The Russell 3000 Growth Index delivered an 18.38% annualized return, nearly doubling the 9.30% logged by the Russell 3000 Value Index. SoFi’s 35% growth allocation, well above the 26% peer average, was a primary driver of its first-place equity ranking. Fidelity Go and Wealthfront maintained balanced splits near 25-26% growth, still benefiting from the durability of mega-cap growth franchises. 

Finally, high-yield corporates returned 5.04% per year, versus 2.12% for municipal bonds and 1.65% for the Bloomberg US Aggregate. Axos Invest (10% high yield, 5.7-year duration) and Empower (6.7%, 5.9 years) topped the bond rankings by leaning into credit while keeping duration moderate. Fidelity Go’s municipal fixed income sleeve cushioned rate volatility and earned a third-place bond finish, and SoFi’s longer eight-year duration underscored its willingness to embrace higher rate sensitivity in pursuit of yield.