MarketGrader Indexes Withstand Tariff Turmoil to Beat Global Benchmarks in First Half of 2025

MarketGrader’s disciplined stock selection continues to beat the market across global markets

If you had fallen asleep on New Year’s Eve and awoken on July 1st, the S&P 500’s 6.2% return might suggest a relatively calm start to 2025. But investors know better. The first half of the year delivered one of the sharpest drawdowns and recoveries in recent memory, triggered by global trade disruptions and a surprise tariff shock in early April. Investors rotated defensively before quickly pivoting back into high-beta growth names as markets rebounded.

Amid the noise, a powerful signal emerged: fundamentally driven equity selection works. Across MarketGrader’s global index lineup, consistent outperformance relative to traditional cap-weighted benchmarks underscored the value of a disciplined, repeatable, and transparent stock selection process.

• 68% of MarketGrader Indexes beat their respective benchmarks YTD through June 30.
• 81% of MarketGrader’sU.S. equity indexes outperformed.
• 60% of International Indexes (Developed & Emerging) outpaced their benchmarks.

Performance Highlights

• 68% of MarketGrader Indexes beat their respective benchmarks YTD through June 30.
• 81% of MarketGrader’sU.S. equity indexes outperformed.
• 60% of International Indexes (Developed & Emerging) outpaced their benchmarks.

U.S. Stock Indexes

MarketGrader’s U.S. Indexes continued their long-term trend of delivering better returns through systematic company selection based on fundamentals. While traditional indexes such as the S&P 500 benefited from a narrow rebound in mega-cap tech, MarketGrader’s balanced approach allowed for more diversified participation without chasing expensive valuations.

MarketGrader’s Core and Core Select Indexes delivered strong returns across the U.S. equity landscape in the first half of 2025, showcasing the strength of their fundamentals-driven stock selection methodology.

• The MarketGrader US Large Cap Core Indexreturned 10.7%, outperforming the S&P 500by 447 basis points. Even stronger results came from the more concentrated strategies: the US Large Cap Select 50 Index and the US Large Cap Select 30 Index returned 11.1% and 11.0%, respectively.

• In small caps, the contrast was even more dramatic. While the S&P Small Cap 600 Index, which includes a quality screen, declined -4.5%, the MarketGrader US Small Cap Core 100 Index gained5.6%, a1,004-basis point margin. The more selective US Small Cap Select 50 Index and US Small Cap Select 30 Index posted even stronger returns, at 5.9% and 8.3%, respectively.

• The only U.S. Core Index that slightly lagged its benchmark was the MarketGrader US Large Cap 200 Index, one of MarketGrader’s style-neutral offerings in U.S. large caps, which returned 6.1% compared to 6.2% for the S&P 500—a negligible 10 basis point difference.

• The Barron’s 400 Index, created in partnership with Barron’s and launched on the magazine’s cover in 2007, continued its legacy of strong performance. The equal weight (EW) version of the index returned 6.0%, beating the Russell Mid Cap Index’s4.8% return year-to-date. It leads its benchmark by 330 bps annually in the last five years. The Barron’s 400 (EW) Index is tracked by the Barron’s 400 ETF (BFOR), from SS&C ALPS Advisors.

International Developed Market Equities

Across developed markets, several MarketGrader indexes stood out in the first half of 2025:

• MarketGrader Europe Small Cap 200 Index (EUR): In a notably strong period for European equities, the MSCI Europe Small Cap Index returned 12% in EUR. MarketGrader’s Europe Small Cap 200 outperformed it by 127 basis points, gaining 13.3% in the first half—nearly doubling the S&P 500’s return. And while MarketGrader’s Large Cap Europe 100 trailed the MSCI Europe Large Cap Index by 67 bps YTD, our index leads its benchmark by 553 bps annually in the last three years.

• MarketGrader UK Large Cap 50 Index (GBP): This index delivered a stellar 24.3% return, beating the FTSE 100’s 9.3% by a remarkable 1,479 basis points, highlighting the strength of our quality-focused selection in the UK market. Our UK Small Cap 200 Index also outperformed its benchmark, the FTSE 250 Index, by 371 bps.

• MarketGrader Israel Indexes (USD): Israeli equities were standouts globally. The MarketGrader Israel Large Cap 30 Index returned 53.2%, while the Israel All-Cap 40 Index returned 45.8%, both more than doubling the MSCI Israel Index’s 19.9% return.

• MarketGrader Australia Large Cap 30 Index (EW /AUD): This index gained 7.7%, outperforming the MSCI Australia Large Cap Index by 300 basis points, validating MarketGrader’s bottom-up, fundamentals-driven approach down under. Its small cap sibling, the MarketGrader Small Cap 60 Index (EW) trailed its benchmark, the S&P/ASX Small Ordinaries Index by 281 bps; however, it leads the benchmark by 454 bps annually in the last three years.

• MarketGrader DM ex-US Income 200 Index (Total Return – USD): In the income space, this index returned 26.5%, outperforming the MSCI World ex-US High Dividend Yield Index, which gained 21.3%—a 520 basis point margin.

Emerging Market Equities

While MarketGrader’s broad Emerging Markets Index family mostly underperformed the MSCI Emerging Markets Index in the first half of 2025, one exception stood out:

• The MarketGrader Emerging Markets Country-Capped 100 Index (MCW) beat the benchmark by 459 basis points, returning 20.2%.

• Despite lackluster performance for several of our broad emerging markets indexes in the first half of 2025, as a group they continue to lead the benchmark index by an average of more than 1,100 basis points per year in the last five years.

At the single-country level, however, MarketGrader’s GARP + Quality framework delivered significant alpha, especially in China and Brazil:

• In China, the MarketGrader China Large Cap 100 Index (MCW) outperformed the CSI 300 Index, returning 12.9% vs. 3.3%, and MarketGrader China Small Cap 200 Index (MCW) beat the CSI 500 Index, 16.2% vs. 6.3%.

• In Brazil, the MarketGrader Brazil 30 Index (EW) returned 45.5%, and the MarketGrader Brazil All-Cap 30 Index (EW) gained 40.6%, both well ahead of the MSCI Brazil Index (USD), which returned 29.4%.

Persistence Reigns

The consistent outperformance of MarketGrader’s fundamentals-driven, rules-based equity indexes across global markets—highlighted after 2024—continues to hold in 2025, especially when viewed over longer time horizons.

This durability is especially evident over the recent three- and five-year periods:

• Over the trailing three years (July 2022 to June 2025), 87% of all MarketGrader Indexes outperformed their respective benchmarks.
  
• Among domestic indexes, 96% exceeded their benchmarks, demonstrating the effectiveness of MarketGrader’s GARP + Quality framework in U.S. equities.
  The only exception was the MarketGrader US Large Cap Growth Index (MCW), which trailed the Russell 1000 Growth Index’s 25.8% return by just 138 basis points.

• Across the trailing five years (July 2020 to June 2025), 92% of MarketGrader Indexes beat their benchmarks. Notably, every single one of MarketGrader’s Developed Market International Indexes outperformed their respective benchmarks over this five-year window—underscoring the platform’s global consistency and long-term alpha potential.

Why MarketGrader Keeps Outperforming

MarketGrader Indexes are rooted in a rigorous, transparent, and rules-based selection process that consistently identifies the top 6% of companies in each market based on our GARP + Quality framework. These companies combine sustainable growth with sound fundamentals and reasonable valuations—across all sectors, geographies, and market caps. And when they no longer meet our standards, they’re replaced systematically, without emotion. The result is a consistent ability to uncover the highest-quality equity opportunities around the world.

Accessing MarketGrader Indexes

MarketGrader Indexes are available for licensing by asset managers, wealth managers, and institutional investors. They can serve as the foundation for ETFs, mutual funds, UCITS, annuities, model portfolios, and direct indexing strategies. To explore the full MarketGrader Index Library or inquire about licensing and implementation,please contact our team.