If you had to sum up 2025 in one moment from an investment perspective, it could be when US president Donald Trump announced his ‘Liberation Day’ plans.
The announcement had a major impact on both the States and the rest of the world.
Trump’s plans also shifted the perspective of the investment world, as previously unloved areas started to receive new interest. However, Liberation Day was not executed in an organised fashion, which added further uncertainty.
As of June 2025, only 41% of US companies had reported adopting AI
The original plans included a 10% universal baseline tariff on nearly all goods imported into the US from 5 April. Europe and Japan faced 20% and 24% respectively, while the UK faced 10%, India 26% and Switzerland 34%.
But, after what Trump described as the public getting “yippy”, he paused the country-specific “reciprocal” tariffs for 90 days, only hours after they had been implemented.
Nearly all US trading partners would still face 10% baseline tariffs, he said.
Ongoing rhetoric
Although the policy is in limbo, the rhetoric has continued and has had an impact on markets.
Following the announcement, Martin Currie’s Zehrid Osmani asked whether Liberation Day would result in portfolio managers and investors starting to look “elsewhere for opportunities outside the States”.
The initiative aims to improve awareness of investing’s long-term benefits
Ninety One’s Grant Webster argued that it had shifted attention towards emerging markets (EMs) and Europe.
By November, the MSCI EM equity index was up nearly 30%, compared with the MSCI World’s 18% – the first time in a decade that EMs have outperformed developed markets.
This contrasted sharply with EMs’ poor performance in the years before Liberation Day. FE fundinfo subsequently revealed that EM funds were the best performing in 2025.
An additional factor was the persistent weakness of the US dollar. Against a trade-weighted basket, the dollar was down 7.9% by the end of July.
Nutmeg portfolio manager Bola Onifade said EM had benefited because “a softer dollar… reduces the cost of servicing the US dollar-based debt”.
The long-awaited Budget
UK chancellor Rachel Reeves’ second Budget was another sizeable event, finally taking place at the end of November. Measures included lowering the current Cash Isa tax-free allowance to £12,000 and designating £8,000 of the £20,000 annual allowance exclusively for investment.
Over-65s will retain a £20,000 cash allowance. The changes take effect on 6 April 2027.
Trump’s plans also shifted the perspective of the investment world, as previously unloved areas started to receive new interest
AJ Bell found the Cash Isa changes to be the least popular Budget measure: only 12% of people were in favour, while 48% opposed it.
Paragon Bank found that 62% of Cash Isa holders would not switch to a stocks-and-shares Isa if the limit were reduced.
Reeves also announced that venture capital trust (VCT) income-tax relief would fall from 30% to 20% from April 2026. Wealth Club CEO Alex Davies observed that, when income-tax relief had been cut from 40% to 30% in 2006/07, VCT fundraising had fallen 65% year on year.
He predicted 2026/27 “will be no different, with smaller companies facing a drought in funding in the years ahead”.
Reeves also said she would reform the UK’s VCT schemes, permitting the Enterprise Investment Scheme and VCTs to invest more money in more mature businesses – a change for which the Venture Capital Trust Association had campaigned.
The VCT industry reacted negatively, but the FTSE 100 rose following the Budget.
AI: from buzzword to backbone
Artificial intelligence (AI) was the final major theme of 2025. Candriam said it had moved from buzzword to backbone of the markets.
Early in the year, Chinese AI start-up DeepSeek triggered a US$600bn fall in the value of Nvidia, a Magnificent 7 company, in a single day. Trump declared this a “wake-up call”.
DeepSeek highlighted two issues: its computing costs were far lower – running on a “shoestring budget of under US$6m” and just 200 employees – and its technology was open source.
The VCT industry reacted negatively, but the FTSE 100 rose following the Budget
Although Nvidia later recovered with strong results, concerns about an AI bubble emerged due to funding issues and power constraints.
Data centres already consume significant electricity, and US facilities alone could account for 12% of national demand by 2030.
Still, Nvidia’s third-quarter results, showing a 62% rise in revenue to US$65bn, helped calm bubble fears. President and chief executive Jensen Huang said: “There’s been a lot of talk about an AI bubble. From our vantage point, we see something very different.”
Other firms, such as Dell, also reported strong AI-driven growth. Syz Group chief investment officer Charles-Henry Monchau said: “The secular AI bull market is far from over. It is a multi-year, multi-sector growth engine.
“AI infrastructure investment triggers broad-based multiplier effects across construction, utilities, heavy industry, transportation and urban development. This wave of spending extends well beyond technology alone.”
As of June 2025, only 41% of US companies had reported adopting AI, and Candriam said wider deployment across sectors “remains significant”.
Retail investing
Alongside these three major investment themes, 2025 ended with growing attention on retail investing.
Nineteen major financial firms have formed the UK Retail Investment Campaign, due to launch in April 2026 to help more people move confidently from saving to investing.
Supported by the Treasury, the Financial Conduct Authority and the Money & Pensions Service, the initiative aims to improve awareness of investing’s long-term benefits.
It’s the first time in a decade that EMs have outperformed developed markets
With the UK having the lowest retail investment levels in the G7, campaign chair Sasha Wiggins said the goal was to “make investing more accessible and give people better support when it comes to taking their first steps”.
Taken together, Liberation Day, Reeves’ Budget, the AI boom and efforts to build a stronger retail investing culture will heavily influence how investments function in 2026.
Darius McQuaid is a reporter for Money Marketing