Global markets advanced in the fourth quarter of 2025, supported by steady growth, resilient corporate earnings, and a continuation of monetary easing. The Federal Reserve implemented a third 25 basis point rate cut in December, lowering the federal funds target range to 3.50%–3.75% and reinforcing confidence that policy was shifting toward a more supportive stance.

U.S. equities extended gains in the fourth quarter, though at a more measured pace following strong advances earlier in the year. The S&P 500 returned approximately 2.7% for the quarter. Growth-oriented sectors, particularly technology and communication services, remained key contributors to performance. Small-capitalization stocks also moved higher, with the Russell 2000 rising roughly 2.2%, supported by improving financial conditions and steady domestic demand.

International equities contributed to global strength. The MSCI EAFE Index gained approximately 5.2%, supported by improving sentiment in Europe and Japan and relatively stable currency conditions. Emerging markets performed similarly, with the MSCI Emerging Markets Index advancing roughly 4.6%, supported by stronger exports, selective policy easing, and renewed capital inflows. The broader MSCI ACWI ex U.S. Index rose about 5.0%.

Fixed-income markets delivered positive total returns as front-end yields declined following Fed easing and credit spreads remained stable to tighter. The Bloomberg U.S. Aggregate Bond Index returned approximately 1.1% for the quarter. High-yield credit modestly outperformed investment-grade duration exposure, with the Bloomberg U.S. Corporate High Yield Index returning about 1.3%, reflecting continued risk appetite and contained default expectations. The 10-year U.S. Treasury yield ended December near 4.2%, little changed on net over the quarter.

Commodities were generally positive. The Bloomberg Commodity Index gained roughly 5%, supported primarily by strength in metals. Gold advanced solidly during the quarter amid safe-haven demand and expectations for easier monetary policy over time. Crude oil declined over the period, reflecting ample supply and softer global demand expectations.

As of December 31, 2025, OCERS’ portfolio had a market value of $27.6 billion, up from $27.0 billion at the end of the third quarter. OCERS’ portfolio generated a quarterly return of 2.5% relative to the policy benchmark return of 2.5%.