Understanding benchmarking and investment strategy in uncertain markets

2025 has certainly been another eventful year for markets.

Geopolitical tensions, renewed trade uncertainty, persistent inflation concerns and shifting interest rate expectations have all contributed to periods of volatility. Against this backdrop, it is natural for investors and those considering investing to question whether their decisions remain the right ones.

At times like these, two common questions tend to arise: “How is my portfolio performing compared with the wider market?” and “Should I be investing at all?”

Understanding both, and putting them into context, can play an important role in maintaining confidence.

What does benchmarking really tell us?

Benchmarking describes comparing performance against a market index, such as the FTSE All-Share or a global equity benchmark. While this can be helpful, it is only one part of the story.

Investment portfolios are not usually designed to mirror a single index. Instead, are structured around personal; objectives, time horizon and attitude to risk. A portfolio built to provide income or protect capital will behave very differently from one focused on long-term growth.

As a result, periods where a portfolio lags a headline index do not necessarily indicate a problem. In many cases, the difference reflects deliberate decisions about risk and diversification, particularly during volatile markets.

Deciding whether to invest at all

For those who are not currently investing, market uncertainty can feel like a reason to delay. Volatility and negative headlines may raise concerns about timing or risk, leading some to remain on the sidelines indefinitely.

A good Financial Planner helps bring clarity to this decision. This includes exploring objectives, timeframes, capacity for loss, and how investments might fit alongside other priorities such as holding cash reserves or managing debt.

In some cases, the right answer may be to start gradually. In others, investing despite uncertainty, with realistic expectations and a suitable strategy may be the most effective way of achieving long-term goals. Confidence often comes not from predicting markets, but from understanding the decision being made.

Putting performance into context

For those already invested, short-term market movements can feel uncomfortable. However, history consistently shows that markets tend to recover over time, even after periods of significant disruption.

Viewing performance over appropriate timeframes, rather than in isolation, is key.

Strategy over speculation

An effective investment strategy is designed with uncertainty in mind. It does not seek to forecast short-term market movements, but instead focuses on building resilience through diversification, regular reviews and rebalancing.

A clear strategy provides reassurance because it explains why you are invested in a particular way. This understanding can be especially valuable when markets are unsettled.

Avoiding emotional decisions

Periods of volatility often trigger emotional responses. Media coverage can amplify concerns, encouraging hasty decisions that may undermine long-term outcomes.

One of the key benefits of working with an Independent Financial Adviser is behavioural support. An adviser provides perspective, helping clients avoid knee-jerk reactions and remain focused on long-term objectives rather than short-term noise.

The importance of regular reviews

Regular reviews are particularly valuable during uncertain times. They allow investors to revisit goals, assess progress, confirm whether benchmarks remain appropriate and make adjustments where circumstances have changed.

For those earlier in their investing journey, reviews also provide reassurance that decisions, whether to invest now, later or gradually are regularly revisited rather than left unattended.

Confidence through clarity

While I hope for a more settled 2026, uncertainty will always be part of investing, but uncertainty without understanding is what often causes concern. A clear investment strategy, sensible benchmarking and ongoing professional advice all contribute to confidence.

Whether deciding to invest, remaining invested, or reviewing an existing portfolio, trusted advice helps ensure decisions are made with clarity and aligned to long-term goals, rather than being driven by short-term market movements.

To discuss your own personal circumstances please contact our Financial Planning team on +44 (0) 330 124 1399 or provide your details via our online enquiry form