2025 - The Year of the Multi-Asset Portfolio

2025 is proving to be the year that vindicates disciplined, diversified, and contrarian investing. A multi-asset 60/40 portfolio that tilts to overseas markets, real assets, and is diversified across US and fixed income markets is outperforming the S&P 500 by approximately 200 basis points year-to-date based on our measure. This isn’t by luck; it’s a result of intentional tilts that go against the grain and a refusal to chase overvalued, over-concentrated exposures.

The Case for Diversification Has Rarely Been Stronger

For years, the market has been dominated by a handful of names. But portfolios built around owning the S&P 500 or NASDAQ-100 or the "Magnificent 7" plus T-bills are simply not diversified. The S&P500 now has over 30% of its weight in seven stocks. That’s not just a concentration risk, it’s a potential vulnerability if market leadership broadens or falters.

Instead, our portfolios emphasize:

• Non-U.S. equities with improving fundamentals and attractive valuations

• Commodities and real assets as a hedge against inflation and USD weakness

• International FX exposures to diversify away from the dollar's increasingly challenged status

What's Working in 2025?

Just look at the YTD performance of select asset classes:

Asset	ETF	YTD Return
Developed Markets ex-U.S.	SPDW	+16%
International Quality Stocks	IQDG	+13%
Gold	GLDM	+28%
Mixed Precious Metals	GLTR	+27%
Infrastructure	BKGI	+26%
Investment Grade Credit	SPIB	+3.5%
High Yield Credit	JNK	+3.6%

Meanwhile, SPY is up only +2% YTD.

Our allocation to real assets (long shunned by many investors) is not only providing returns but also critical hedging against geopolitical risk, rising deficits, and U.S. dollar vulnerability. For example, Polymarket currently shows a 30% probability that Iran strikes Gulf of oil facilities before September, a sobering signal that validates owning inflation-sensitive, real-world assets.

The Real Bubble Isn't in Tech. It's in Private Markets

Contrary to popular belief, we believe the true bubble is in private equity and private credit, where transparency is low, valuations are stretched, and liquidity is sparse. That's where we see real long-term risk.

Meanwhile, credit markets are telling a different story:

• IG Credit and high yield have outperformed cash by 150 bps YTD

• "T-bill and chill" has been the wrong move: T bills are up 1.9% YTD and trailing inflation

Quant Models Back Our Overseas Tilt

Our 4-factor model continues to favor non-U.S. markets over SPX. Markets like Europe and Japan are showing:

• Positive earnings revisions

• Strong forward estimate momentum

• High estimate revisions

• Attractive valuation spreads

Time to Rotate: From Mega-Cap Tech to Broader Markets

There are dozens of S&P 900 stocks growing earnings faster than the Mag 7. For example:

• 76 names are outgrowing NVIDIA

• 86 are outpacing Amazon

• 140 are beating Meta

• 163 are expanding earnings more than Google

As you know, we think it's time to trim the Mag 7 and rotate into equal-weight and quality strategies.

In our view, S&P 500 is no longer a diversified index. Mag 7 make up 30% of the index. Yes, earnings contribute to 20% of total earnings but doesn’t feel prudent if you want to be diversified. According to the Financial Times story from January of this year, if we remove NVIDIA from the S&P 500, the index's total returns since 2022 have underperformed the MSCI EMU Index since late 2022.

Source: Financial Times

Other Macro Themes We're Watching

Beyond fund-specific positioning, there are several important macro signals we're tracking:

• Less Rate Cuts Than What’s Priced In: With inflation still elevated, Atlanta GDP running at ~3.4%, and a contained labor market, we don’t expect the Fed to pivot unless the Iran situation material worsens which then all bets would be off.

• Tightening Through Long Rates: Elevated long-term interest rates are doing some of the Fed’s tightening for them, reducing the need for near-term policy action.

• Policy Risk Has Stabilized: Much of the negative policy news (immigration, tariffs) appears to have bottomed months ago. The Israel-Iran situation is a known known - unlike trade wars, we don’t believe it poses systemic risk to the market.

• H2 Policy Tailwinds: We expect policy to turn more supportive in the second half - think tax cuts and deregulation.

• USD Strength as a Tailwind: The dollar has now become a positive driver for multinational earnings, a shift from last year’s headwind.

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All return data referenced in the above blog are as of June 20th. 

Past performance is not indicative of future results.

FOR FINANCIAL PROFESSIONAL USE ONLY. NOT FOR PUBLIC DISTRIBUTION.

Warranties & Disclaimers

As of the time of this writing, Astoria held positions in the following securities on behalf of its clients: SPDW, IQDG, GLDM, GLTR, BKGI, SPIB, and JNK. There are no warranties implied. Past performance is not indicative of future results. Information presented herein is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and, unless otherwise stated, are not guaranteed. The returns in this report are based on data from frequently used indices and ETFs. This information contained herein has been prepared by Astoria Portfolio Advisors LLC on the basis of publicly available information, internally developed data, and other third-party sources believed to be reliable. Astoria Portfolio Advisors LLC has not sought to independently verify information obtained from public and third-party sources and makes no representations or warranties as to the accuracy, completeness, or reliability of such information. Astoria Portfolio Advisors LLC is a registered investment adviser located in New York. Astoria Portfolio Advisors LLC may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements.

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