Investment performance and economic update: April 2025

Australian Retirement Trust (ART) Chief Economist Brian Parker recaps our long-term investment performance.

ART’s QSuper Outlook portfolio, which is the MySuper default option for QSuper members under the age of 45, produced returns of -0.49% over the March quarter and 7.93% over the year to March 2025. Longer-term returns remain solid, with the Outlook option producing a return of 6.42% p.a. over the 10 years to the end of March 2025.¹

Other investment option returns can be found here. The table below shows returns from the major publicly traded asset classes for periods to the end of March 2025.

Sources: Bloomberg, Australian Retirement Trust. Past performance is not a reliable indication of future performance.

A challenging market environment

After a reasonably positive start to 2025, world share market sentiment deteriorated as the quarter progressed in response to the growing threat of a trade war triggered by President Trump’s decisions on tariffs. Australian and developed market share returns were negative over the quarter, as significant falls in US and Japanese share prices more than offset share price gains in the UK and Europe. Emerging markets shares enjoyed solid returns over the quarter, with strong gains in China, eastern Europe and most Latin American markets more than offsetting share price falls in south-east Asia, India and Taiwan. Chinese shares benefitted after the announcement of policies to mitigate the impact of US tariffs by boosting household spending.

The Australian dollar was stronger against a range of emerging markets currencies, which detracted from unhedged emerging markets share returns in Australian dollars. In contrast, the Australian dollar weakened somewhat against developed market currencies, boosting unhedged developed market share returns.

Australian shares produced negative returns over the March quarter, with losses in healthcare, consumer discretionary, financials, energy and IT shares more than offsetting gains in industrials, utilities, telecommunications and consumer staples.

After a sharp sell-off in the final months of 2024, both Australian and global fixed income returns were positive over the March quarter. Australia’s inflation rate continued to ease, allowing the Reserve Bank of Australia (RBA) to reduce the official cash rate at its February meeting. Shorter term Australian bond yields declined as a result, while long-term bond yields were little changed over the quarter. Bond yields in the UK and Europe continued to rise over the March quarter, US bond yields declined sharply on fears that the trade disruptions induced by President Trump’s tariff moves could lead to a US recession.

The outlook and what is ART doing?

After a reasonably solid year of global growth and further progress in bringing inflation rates down, the outlook for the global economy over the year ahead remains uncertain, courtesy of US trade policy. It remains unclear the exact level of tariffs that will eventually be applied to US trade partners, as does the extent of the potential damage to global trade, business investment and economic growth. On inflation, additional tariffs represent a one-off boost to the level of prices, but that will not necessarily lead to ongoing higher inflation, and hence higher interest rates. This is particularly true if consumers and businesses do not adjust their long-term inflation expectations. However, if economic conditions deteriorate in the US and elsewhere because of trade disruption, the world’s major central banks may well be forced to reduce rates further.

Here in Australia, inflation has fallen, but progress in returning inflation to target has been slower than in other economies. Economic growth in Australia has slowed considerably and there has been some weakening in the labour market and a moderation in wages growth. However, the RBA remains of the view that the level of aggregate demand is above the economy’s supply capacity and that gap needs to narrow further before interest rates can decline.

ART does not design portfolios based on its own or anyone else’s short-term economic, market or geopolitical forecasts. However, our investment team and our external investment managers do seek to capitalise on opportunities that inevitably emerge during times of heightened market volatility.

Over the quarter, our Dynamic Asset Allocation (DAA) strategy slightly reduced our exposure to sovereign bonds, in favour of cash and a small increase in our share allocation. However, we also made regular adjustments to DAA positioning in response to market volatility, which resulted in changes in relative value between asset classes. Those opportunities have increased significantly since the end of March.

At the end of March 2025, our DAA strategy marginally favoured bonds over shares and cash. The strategy also sought to take advantage of significant differences in relative value between countries. Within DAA’s shares allocation, we preferred Japanese shares over shares in the US and Australia. In fixed income, we were overweight in France, UK, Italy and Australia and maintained underweight positions in Canadian, German, Japanese and US bonds. The DAA strategy’s currency exposure is underweight in the euro, Swiss franc and other European currencies as well as the Canadian dollar and UK pound, while favouring Asian and Latin American currencies.

ART continues to hold a substantial allocation to private assets, particularly the key unlisted asset classes – real estate, infrastructure, private equity and private debt. As a large superannuation fund, we have well-diversified portfolios of these assets that we expect will deliver strong, long-term returns, while reducing our members’ exposure to share market volatility.

During the quarter, our real estate team made an additional investment into Anchor Health Properties, a US owner, operator and developer of healthcare and medical office real estate.

Our private equity team sold down part of our holding in Vishal Mega Mart, an Indian discount retailer, through an initial public offering on the National Stock Exchange of India and the Bombay Stock Exchange. In doing so, significant profits have been realised for ART members. The team also committed to a new external manager that focuses on investing in software and services businesses in Europe and North America. In addition, our private debt managers are actively deploying capital in North America and Europe, taking advantage of favourable credit conditions.

What you need to know about market volatility and your super

We understand that recent market movements may be causing concern. It’s natural to feel unsettled when headlines focus on uncertainty - but it’s important to remember that superannuation is a long-term investment.

Head to our website for more information on everything you need to know to help you feel more confident about your future.

Help to choose your investments

How your super is invested can have a big impact on what you'll have in retirement. Our online advice tool, or speaking with a financial adviser, can help you select the right blend of QSuper investment options for you. Advice about your QSuper account is included with your membership.²
Book an appointment today online or call 1800 643 893.

1. Past performance is not a reliable indication of future performance. For periods up to 30 June 2024, investment returns for this option are after administration fees and costs, investment fees and costs, transaction costs and investment taxes. From 1 July 2024, investment performance is after investment fees and costs, transaction costs and investment taxes, but before administration fees and costs.

2. Representative of QInvest Limited (ABN 35 063 511 580, AFSL 238274) give financial advice. QInvest Limited is responsible for the advice it gives and is a separate legal entity. Read the Financial Services Guide for more information.