The Takeaway
Best Performing Themes: Next Generation Artificial Intelligence, Cloud Computing, Nanotechnology.
Worst Performing Themes: Healthcare Innovation, Brain Health Innovation, Food Innovation.
With growth having soundly outperformed value, thematic indexes highly exposed to growth stocks tended to perform well.
Despite escalating trade frictions and heightened geopolitical tensions, the Morningstar Global Markets Index posted an impressive 11.7% total return in the second quarter. In the quarter, market conditions echoed those witnessed during the 2023 and 2024 calendar years, with growth soundly outperforming value and the "Magnificent 7" stocks driving a healthy portion of broad market returns.
Leveraging forward-looking insights from Morningstar equity analysts, Morningstar Thematic Indexes are designed to deliver unparalleled thematic purity across a range of durable themes. Across Morningstar's thematic index lineup, the three top-performing indexes in the second quarter focused on the Next Generation Artificial Intelligence, Cloud Computing, and Nanotechnology themes, with each of these indexes exhibiting a growth bias relative to the Morningstar Global Markets Index. Within this group, the Morningstar Next Generation Artificial Intelligence Index performed best, delivering a 30.5% total return and outperforming the Morningstar Global Markets Index by 18.8%. Meanwhile, the three worst-performing thematic indexes focused on the Healthcare Innovation, Brain Health Innovation, and Food Innovation themes. Within this group, the Morningstar Global Healthcare Innovation Index performed worst, generating a -1.1% total return and underperforming the Morningstar Global Markets Index by 17.4%.
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