This is part of our quarterly plan performance series. Catch up on last quarter’s summary here: How PensionBee’s plans are performing as at Q1 2025.
The second quarter of 2025 was another rollercoaster for investors. It began with a sharp market selloff on 2 April after US President Trump announced ‘Liberation Day’ tariffs, sparking global trade panic. By quarter end, however, investors’ confidence returned, pushing the value of US equities (company shares) to new highs.
In early April, the US tariff announcement raised trade war fears, leading to declines in equity and bond markets, including the S&P 500 (an index that tracks the performance of 500 of the largest public companies in the US) while 10-year government bonds in the US and UK rose. To ease tensions, the US announced a 90 day pause on tariffs and reached early agreements with about 60 countries, excluding China.
The market began recovering in May after the US and China agreed to reduce tariffs following trade talks in Geneva. While rate cut hopes persisted, bond markets shifted focus to long-term US debt concerns, keeping yields high.
June brought further geopolitical shocks. Israel bombed Iranian cities over nuclear threats, followed by US strikes on Iran’s key nuclear sites. Oil and gold prices surged on fears of Iran’s retaliation, such as closing the Strait of Hormuz. Instead, Iran fired missiles at a US military base in Qatar, which were all intercepted. This eased investors’ fears of escalation, lifting US stocks and stabilising oil prices.
PensionBee plans’ Q2 25 performance is detailed below. For updates on global markets in June, see our latest blog.
The performance data covers 1 April to 30 June 2025 and is sourced from our money managers or factsheets. All figures are before fees (except for Global Leaders and Tailored Plan) and past performance is not a guarantee of future performance.
PensionBee’s default plans
4Plus Plan
The 4Plus Plan is managed by State Street with an equity proportion of 52.1%^. It’s the default plan for our customers over 50 years of age. The plan is actively managed for volatility management in times of market turbulence, whilst targeting a 4% above cash over a minimum five-year period.
^Equity % at 30 June 2025, asset allocation changes on a weekly basis due to the plan’s actively managed component.
Global Leaders Plan
The Global Leaders Plan is managed by BlackRock with an equity proportion of 100%. It’s the default plan for our customers aged under 50. The plan invests in around 1,000 top public companies globally. It aims to maximise the growth of your pension savings in the years before retirement.
^ The plan was launched in February 2025, so performance data for the 3-year and 5-year periods is currently unavailable.
Tailored Plan
The Tailored Plan is managed by BlackRock. Please note that the 2037-2039 vintage was closed down during the second quarter as part of the default plan transition to the Global Leaders Plan.
PensionBee’s sustainable plans
Climate Plan
The Climate Plan is managed by State Street with an equity proportion of 100%.
^ The new Paris-aligned strategy was launched in September 2024, so performance data for the 3-year and 5-year periods is currently unavailable.
Shariah Plan
The Shariah Plan is managed by HSBC and traded by State Street with an equity proportion of 100%. The plan invests in the 100 largest stocks traded globally that comply with Shariah investment guidelines.
PensionBee’s other plans
Tracker Plan
The Tracker Plan is managed by State Street with an equity proportion of 80%. The remaining 20% is allocated to fixed income.
Pre-Annuity Plan
The Pre-Annuity Plan is managed by State Street with a fixed income proportion of 100%. The plan invests in bonds to provide you with returns that broadly correspond with the cost of purchasing an annuity.
Preserve Plan
The Preserve Plan is a money market fund managed by State Street. The plan makes short-term investments in high-creditworthiness companies to preserve your money.
Learn more about how your pension is invested
Your pension is invested in a range of assets like equities, bonds, property and cash, and your pension balance depends on how these assets perform. See below for a summary of their performance in Q2 2025.
How did global stock markets perform in Q2 2025?
Global stock markets have shown a strong rebound despite ongoing global conflicts and uncertainty, particularly in Asian markets like China, Taiwan, South Korea and India, which saw significant gains in Q2. The MSCI Asia ex-Japan Index (an index that tracks the performance of large and mid-size public companies across Asia, excluding Japan) returned 12.7%. Information Technology and Communications led gains as trade fears eased and sentiment toward AI and tech stocks improved. This outperformance relative to the US was largely driven by a weakening US dollar, which boosted local currency returns in USD terms.
The US market also advanced in Q2, recovering from April’s volatility. The S&P 500 surged 10.9%, which showed a strong rebound in the quarter(Q1: -4.6%). Investor sentiment improved on the back of steady employment figures and a lower-than-expected Consumer Price Index (CPI) inflation reading in May, down from April.
In contrast, European and UK markets posted modest gains following a strong Q1. The MSCI Europe ex-UK index (an index that tracks the performance of large and mid-size public companies in Europe, excluding the UK) rose 3.7%, and the FTSE 100 (an index that tracks the performance of 100 largest UK public companies) gained 3.2%. This modest performance compared to other regions stemmed from sector allocation, as growth stocks like tech and communications outpaced value stocks like financials, energy, and consumer goods. The latter are areas where Europe and the UK are more concentrated. Ongoing US trade policy uncertainty also weighed on sentiment. However, the industrial sector, particularly defence stocks, saw strong growth after NATO countries pledged to raise defence spending to 5% of their GDP by 2035.
*Please note that the performance figures above are reported in local currencies, except for the MSCI Asia ex-Japan, which is reported in USD due to the use of multiple currencies among its constituents.
Overall, the global stock market showed a resilient performance in Q2 compared to the previous quarter, reflecting a strong rebound in investor confidence. This recovery was supported by the initial shock of the US Liberation Day tariffs in April and settled by a subsequent 90-day pause, along with at least a temporary resolution in geopolitical tensions and trade policies.
^ All figures are presented in local currencies, except for MSCI Asia ex-Japan, which is reported in USD.
How did UK bond markets perform in Q2 2025?
The US Liberation Day tariffs led to a global bond selloff as investors expected rising US inflation from higher import costs, causing volatility in both the US and UK markets.
Despite mid-quarter volatility, UK government (gilts) and corporate bonds stabilised and delivered modest gains by quarter-end. This was supported by the latest monthly data showing that the UK CPI (3.4%) is broadly in line with the Bank of England (BoE)’s anticipation of an increase in inflation (3.7%) due to higher energy prices. Therefore, the BoE decided to keep its interest rate at 4.25% during its meeting in June 2025, after starting to cut rates in April.
UK government bonds (gilt) yields and Bank of England (BoE) interest rates
Generally, short-term UK gilt yields are closely linked to the BoE base rate changes. These yields closely reflect current monetary policy and expectations for near-term rate change. Whereas long-term gilt yields, like 10-year gilts, are also affected by BoE rate changes, but are influenced by other factors, including inflation rates, fiscal policy and global economic trends.
The following graph illustrates their relationships. In 2025, when the BoE cut its base rate from 5% to 4.25%, the 10-year gilt yield remained elevated, whereas the 3-year gilt yields broadly followed the changes in rate cuts.
For the rest of 2025, long-term gilt yields are expected to be shaped by BoE monetary policy decisions, fiscal measures like the Autumn Budget, and international trade development with the US, while short-term yields are likely to align with changes in the base rates.
Have a question? Get in touch!
Do you want to know more about your pension plan with PensionBee? Learn more about the top 10 holdings in your pension fund on our blog, which is regularly updated. You can also look at our Plans page to learn how your money is invested in different assets and locations, or log in to your BeeHive to see your specific plan. You can always send comments and questions to our team via engagement@pensionbee.com.
Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invested. This information should not be regarded as financial advice.
