Cayside Review: 2025 Q4
This newsletter includes our 2025 Fourth Quarter review, global market update and outlook, key numbers, and announcements.
“To figure out who will win any given technology race, just look at the rate of acceleration of innovation & growth.”
-Elon Musk
The fourth quarter completed a standout year for precious metals (gold and silver). Equities had another strong year, and Bonds exhibited modest gains as markets continue to fluctuate up on interest rate/fiscal spending policy, rapidly developing geopolitical changes and near-term capex spending assumptions. Gold experienced a nearly 60% increase in price in 2025, while Equity indices pushed higher with the S&P 500 up +2.7% QTD and 17.8% YTD. Equity gains were largely concentrated in technology, AI and power-related companies, while many industrial and consumer companies showed muted returns for the year.
As technology continues to advance, the evolution of Artificial Intelligence (AI) has surprised many with its speed of progress in such a short amount of time. From chips to data centers to application and beyond, the landscape is changing quickly, and valuations of the winners and losers will likely shift, creating opportunity. In some cases, high valuations and growth assumptions have created an environment ripe for dispersion and risk, increasing our preference for allocating towards industry-dominant companies and investment managers with unique and expert insight.
We believe 2026 and beyond will bring many new technologies with potential life-changing impact, particularly in autonomous machines, humanoids, and space communication and logistics. From a portfolio management standpoint, we expect return dispersion across asset classes and styles to remain elevated. With strong recent returns and valuations in Equity markets, we favor a larger role for alternatives to add diversification and uncorrelated risk and return drivers.
Q4 2025 Market Commentary
Equities: Modest Quarterly Gains
S&P 500: Q4: +2.7%, YTD: +17.8%
Nasdaq Composite: Returns led by AI and semi-conductors: Q4: +2.7%, YTD: +21.1%
Dow: Value has lagged growth and AI, but made fresh highs into quarter-end: Q4: +3.6%, YTD: +12.9%
Source: FactSet
Equities posted another strong year after having enjoyed a goldilocks-like 20-25% annual returns over the past five years. Investors remain positive due to rapid technological advancements, potential for large capex spending, and continued expansion of money supply and deficit spending.
Fixed Income: Defensive Yield in Uncertain Terrain
Barclays Aggregate Bond Index: Q4: 1.1%, YTD: 7.3%
Bloomberg Municipal Bond Index: Q4: 1.6%, YTD: 4.3%
Bloomberg Corporate High Yield Bond Index: Q4: 1.5% YTD: 8.8%
Source: FactSet
Bond markets produced modest performance amid persistent inflation concerns and shifting interest rate expectations. We continue to favor short-duration assets such as U.S. Treasury Bills and High Yield Municipal Bonds, which can offer compelling risk- and tax-adjusted yields while providing a stable anchor in volatile credit environment. In general, we do not believe high yield corporate bonds - through public or private debt markets – offer compelling risk/return opportunity given record-low spreads.
The High Yield Corporate Bond Spread is currently around 2.8% (the average difference in yield of a high yield taxable corporate bond versus a safer risk-free bond offered by the U.S. Treasury). Prolonged periods of low spreads typically signals excessive risk -taking in bond markets, warranting heightened caution.
When evaluating bonds, we focus on taxable-equivalent (TE) yields to level the playing field across taxable and non-taxable options relative to risk. We believe many areas of the credit market do not adequately compensate investors for the potential risks and illiquidity that could lie ahead. For instance, Emerging Markets debt yields ~5.8% TE yield while U.S.-based Municipal bonds yield between 5.4 to 9.3% TE yield. We continue to thoughtfully consider: “Are we being properly compensated for the level of risk taking in the bond markets?
Source: Nuveen
For these important risk management reasons, we prefer U.S. Treasuries and Municipal Bonds for our fixed income and cash management exposure.
Commodities: Precious Metals Continue to Perform
Gold reached new records toward the end of the fourth quarter (nearly doubling from all-time highs), driven by central bank buying and safe-haven demand - a YTD gain of roughly 60% and one of the best-performing assets classes this year.
Bitcoin: Finished 2025 at approximately $87,500 and a return of –6.5%.
Key Data
Important Topics
Acceleration of Technology and Innovation
We are living in the fastest-changing world in human history. The "discovery rate" of technology -or rate of technological discovery- refers to how quickly new technologies and life-changing inventions emerge over time. Technology empowers learning and innovation, which accelerates due to the compounding effect of technology building on prior knowledge and enabling faster progress. Over the past century, the discovery rate has accelerated to the point where life-changing inventions occur nearly every year, compared to decades or centuries in the past.
At Cayside, we believe that humanity is on the precipice of a new world where nearly every industry will be rapidly transformed. This brings opportunity for investment and adoption. As early adopters in understanding Artificial Intelligence’s impacts, we recognize the potential of new frontiers in space exploration, autonomous machines, humanoid robots and advanced power generation. Our focus is on deeply understanding these areas to invest on behalf of our families and capture the growth ahead.
Evolution of Artificial Intelligence
In just the past several years, AI has evolved from a potential fad to a recognized engine for the future. At Cayside, we invested early in chip makers and software companies after witnessing demand from blockchain and consumer-facing AI Models like ChatGPT. As computing power demand has surged, we allocated to component and power suppliers tied to data centers. We are now at a stage where AI applications will likely infiltrate most aspects of consumer and business life, affecting spending, revenues and profit. From an investment standpoint, we prefer industry-leaders and continue to learn from and invest with expert investment managers in the space.
Space Communications and Logistics:
Over the past 100 years, venturing beyond Earth’s atmosphere and into space has gone from a dream to routine. NASA’s space shuttle program (1981 to 2011) averaged 4.5 launches per year. In 2025, SpaceX had 165 launches - nearly every other day! Advancements in reusable rockets have created a new industry for space-based data communication, defense systems, power generation, data processing, and more. These rapid changes provide a rich investment environment.
INVESTMENT OPPORTUNITIES & RISKS
Why Alternative Assets make sense now
As equity markets continue to make new peaks alongside substantial technology growth, we increasingly look to diversify capital to opportunities seeking differentiated performance outcome to traditional equities and fixed income markets.
Several practical reasons to add or expand alternatives in this environment:
Diversification: Many hedge fund strategies (L/S equity with disciplined gross/net control, macro, systematic and relative value, etc.) target low-to-moderate correlation to stocks and bonds, helping stabilize portfolio volatility.
Risk-Adjusted Absolute Returns: With changing industry and business cycles, dispersion creates fertile ground for stock selection and capitalizing on growth trends.
Differentiated Performance and Risk Outcomes: Alternative strategies offer unique asset class profiles that can provide risk management and performance despite challenging market environments.
Business Update & Personnel News
Participation at leading Industry and Investment Conferences led to insightful learning on investment opportunities, risk and industry best practices, allowing us to enhance our investment offerings and service quality.
Cayside Launches Cayside Alternative Fund (“CAF”) Cayside is excited to announce CAF, enabling our families and clients to invest in an LP structure that accesses hard-to-reach investment managers and strategies at substantially reduced minimums, with improved custody and oversight.
FAMILY OFFICE SERVICES
Beyond Portfolio Construction, we provide Family Office Solutions across wealth decisions. Core services include:
Investment Governance & Consolidated Reporting — multi-custodial, across entities and accounts reporting; cash management
Cash, credit & lending optimization of idle balances, securities-based lending solutions via our relationships with financial institutions, Treasury Bill cash management
Tax & Estate Coordination — proactive collaboration with your CPAs/attorneys on tax payments, gifting, GRATs, estate planning, and wealth solutions
Risk Management — insurance reviews, long-term advanced planning and estate strategy, key-person and liability coverage coordination
Next-gen Education & Governance — tailored curriculum and workshops for rising generations; family meeting design and facilitation
Philanthropy & Mission Alignment — DAF/foundation administration and impact alignment
We appreciate your support and confidence in our process and are excited to keep adding value for each of our client families.
Disclosures: Cayside Partners, LLC ("Cayside") makes no warranty as to the accuracy or completeness of any data herein. Information presented in this report is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities. Investments involve risk and are not guaranteed. Past performance is not indicative of future results. This report is intended for the recipient(s) only and not for further distribution without written consent. Investment advice offered through Cayside Partners, LLC, a Securities and Exchange Commission registered investment advisor able to provide investment advice in states where it is registered, exempt, or excluded from registration. Content contained herein should not be construed as an offer or solicitation for investment advice or for the purchase or sale of any security, insurance, or other investment product. Investments involve the risk of loss, including possible loss of principal. Please consult with a qualified financial, tax, accounting, or legal professional before implementing any ideas or strategies discussed here. Content provided is obtained from sources believed to be reliable but cannot be guaranteed as to its accuracy or completeness. Our firm's AUM figures are reported on a gross U.S. Dollar basis and may include assets managed on a discretionary and non-discretionary basis. Past performance is not indicative of future results, and AUM figures are subject to change. For further information regarding our firm's AUM or to obtain a copy of our most recent Form ADV, please contact us.