Executive Summary
The classic investment adage of “Sell in May and go away” was nowhere to be found last month as global equities rallied on easing trade tensions and a generally strong earnings season. In fact, the S&P 500’s 6.29% return, was its strongest showing in the month of May in more than 30 years. Non-U.S. equities also posted strong results, with developed and emerging markets stocks gaining more than 4%. Bonds, on the other hand, took a step back last month (-0.72%) as concerns around tariff-induced inflation and the U.S. budget deficit pushed rates up across the yield curve.
Equity
The S&P 500 ended May in slightly positive territory for the year (+1.06%), erasing the sizable losses that investors experienced in March and April. On the month, markets were led higher by U.S. large growth stocks (+8.85%) which had been laggards for much of 2025. Similar to the prior few years, results for the S&P 500 were largely attributable to just a handful of stocks, with six names (largely “Magnificent 7” members) accounting for 65% of the index’s monthly return.
Non-U.S. stocks continued to perform well, despite underperforming their U.S. peers during the month. On the year however, they continue to exhibit their dominance, with the MSCI EAFE index advancing by nearly 17% and the MSCI EM index gaining 8.73%. Gains were even more outsized when looking at the EAFE Value index, which has returned more than 21% since the start of the year. Performance has been largely fueled by waning optimism around the U.S. exceptionalism story, along with significant weakness in the U.S. dollar, which has fallen roughly 8% from its mid-January high.
Fixed Income
Investment grade bonds fell by 0.72%, as yields rose in a generally parallel fashion across the U.S. yield curve. This left the benchmark U.S. 10-year treasury with a yield of 4.40%, 24 bps higher than where it started the month. The move in rates can largely be attributed to investor concerns around the impact that tariffs may have on inflation later this year, as well as worries over the fiscal health of the U.S. From an asset class standpoint, high yield bonds were a clear leader on the month, gaining 1.68%. These higher risk securities benefitted as investor sentiment shifted to risk-on. This sent spreads tumbling from a high of more than 450 bps in early April to just 315 bps on May 31st.
Real Assets
Broad-basket commodities took a step back in May (-0.58%), as the run up in gold lost some of its luster. Gold prices fell marginally as investors reembraced risk. This follows a near-historic run in the price for the safe haven precious metal, which has risen by 25% from the start of the year. Crude oil prices, which have fallen meaningfully throughout 2025, mounted a modest recovery, with the price per barrel for WTI rising to over $60 from an intra-month low of $57/barrel.
Closed End Funds
Closed end fund discounts narrowed during the month, fueled by strong equity market returns and declining credit spreads. This left the average fund trading at a discount of 4.5% below NAV, roughly in-line with the long-term average. Although discounts narrowed pretty evenly across the major asset classes, there continues to be a meaningful divergence in the level of relative discounts. Most apparent is within the fixed income space, where taxable funds trade at an average discount of just 2.2%, compared to a historical average of 4%. Conversely, municipal bond funds still trade at relatively attractive discount levels, currently 5.8% versus a long-term average of 4.1%.
iCM Tactical Strategies
iCM’s tactical strategies, which utilize ETFs and/or mutual funds, generally trailed their blended benchmarks for the month, as U.S. large growth stocks were market leaders. However, relative performance remains strong over the YTD period, driven largely by our overweight to U.S. value stocks and non-dollar assets. For more detailed attribution information please reach out to a member of the ICM Advisor Services team.
Disclosures
Integrated Capital Management, Inc. is an SEC Registered Investment Advisor. Registration does not imply any certain level of skill or training. Monthly “Market Flash” is intended solely to report on various investment views held by Integrated Capital Management. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security.
Past performance is no guarantee of future results. Please note that investments in foreign markets are subject to special currency, political, and economic risks. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
Asset Allocation Outlook is intended solely to report on various investment views held by Integrated Capital Management. Opinions, estimates, forecasts, and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice. We believe the information provided here is reliable but should not be assumed to be accurate or complete. References to specific securities, asset classes and financial markets are for illustrative purposes only and do not constitute a solicitation, offer or recommendation to purchase or sell a security. Outlook may change at any time given shifting market conditions. Past performance is no guarantee of future results. Please note that investments in foreign markets are subject to special currency, political, and economic risks. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
Closed end funds are exchange traded, may trade at a discount to their net asset values and may deploy leverage. When the strategy purchases shares of a closed-end fund at a discount to its net asset value, there can be no assurance that the discount will decrease and may possibly increase. If a closed-end fund uses leverage, increases and decreases in the value of its share price may be magnified. Distributions by a closed-end fund may include a return of capital, which would reduce the fund’s net asset value and its earnings capacity. Closed end funds are offered by prospectus. The prospectus and/or other applicable offering documents contain this and other important information about the investment strategy. You should read the prospectus and/or other applicable offering documents carefully before investing. Investors should consider the investment objectives, risks, charges and expenses of the investment strategy before investing. iCM uses third-party data that is believed to be accurate and complete. All data is subject to change.
All investing involves the assumption of risk and the possible loss of principal. The main risks as it pertains to iCM’s strategies are US equity risk, international equity and fixed-income market risk, interest rate risk and currency risk. While attempting to achieve the objectives of the strategies, investors will be exposed to the risk of loss from these sources along with others yet to be identified.
TICE Blended Benchmark comprised of 32% S&P 500/8% MSCI EAFE/38% Bloomberg Aggregate Bond/20% Bloomberg Municipal Bond/2% Cash
FTSE NAREIT All Equity REITs TR = U.S. REITs
S&P 500 Index = U.S. Large Cap
Russell 1000 Growth TR = U.S. Large Growth
Russell 1000 Value TR = U.S. Large Value
Russell 2000 Index = U.S. Small Cap
MSCI EAFE ND USD = Developed International Equities
Bloomberg High Yield Corp Bond = High Yield Bonds
Bloomberg Municipal TR = Municipal Bonds; BBgBarc
Bloomberg US Credit TR = U.S. IG Corp Bonds
Bloomberg Aggregate Bond = U.S. Taxable Bonds
Bloomberg Treasury TR = U.S. Treasury Bonds
MSCI Emerging Markets ND USD = Emerging Markets Equities;
JPM GBI EM Glbl Divers TR = EM Bonds;
Bloomberg Commodity TR USD = Broad Basket Commodities
First Trust Composite Closed-End Fund TR Index = Closed End Funds
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