Investment performance and economic update: October 2025

Australian Retirement Trust (ART) Deputy Chief Economist Alexis Gray 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 a return of 4.4% for the September quarter and 12.4% over the year to September 2025.¹ Longer-term returns remain solid, with the Outlook option producing a return of 7.4% p.a. over the 10 years to the end of September 2025.

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 September 2025.

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

World share markets extended gains in the September quarter, buoyed by the US Federal Reserve’s first rate cut of the year in September, and the delivery of strong earnings reports by AI/tech firms. This helped offset ongoing geopolitical and macro risks, which weighed on the market earlier in the year.

In the US, the S&P 500 registered a strong gain for the quarter as rate cut hopes and solid earnings drove investor sentiment. Tech and communications sectors led the gains, while consumer staples lagged. European equity markets also advanced, though with more modest returns. Emerging markets were the strongest global performers, beating developed markets over the quarter. Advances were led by technology heavy markets in Asia, notably Taiwan, Korea and China. A softer US dollar also provided a tailwind to emerging markets.

The Australian dollar had mixed performance against major currencies and strengthened on average, dragging on returns for unhedged international equity exposures relative to hedged. When the Australian dollar rises, unhedged foreign-denominated assets fall in value when measured in Australian dollars.

Australian equities held up well through the quarter, benefitting from global tailwinds and robust domestic sectors. Materials led the gains, as mining shares rose sharply, followed by utilities and consumer discretionary.

Australian listed real estate (A-REITS) also performed well over the quarter, with leadership concentrated in data centres and industrial REITs. Traditional office and some retail segments underperformed within the category.

Global fixed income returns were modestly positive overall as the US Federal Reserve’s September cut was priced in. Non-government securities tended to outperform as credit spreads tightened. Longer-dated government bonds in France and the UK experienced volatility because of fiscal concerns. The Reserve Bank of Australia (RBA) cut the cash rate further in August, joining central banks in New Zealand, the US and UK in loosening monetary policy. As interest rates fall, returns on cash are slowly diminishing.

Over the quarter, ART’s unlisted assets produced positive returns, with private equity outperforming infrastructure and real estate. However, private assets have underperformed public markets, particularly given the very strong returns delivered by international share markets.

The outlook and what is ART doing?

The global economy is expected to slow down slightly over the coming year, mainly because of higher tariffs, increased uncertainty about trade policy, and tighter immigration rules. While some countries have taken steps to boost their economies through government stimulus programs, these efforts raise concerns about long-term debt and financial stability.

Inflation is expected to ease in most parts of the world, though it may stay higher in the US due to the implementation of sharply higher tariffs. Global trade growth will likely remain sluggish due to continued trade war between the US and its major trading partners, which is leading to fragmentation in global trade. Over the longer term, macro risks remain, including the risk of further tariff increases, financial market instability, and climate-related disruptions. On the positive side, advances in technology, especially artificial intelligence, could help lift growth if managed well.

Here in Australia, economic growth is slowly recovering, with signs the housing market is gaining momentum and consumers are spending a little more. Recent reports show inflation is still hovering around the top end of the RBA’s 2-3% target band, suggesting the RBA will be in no hurry to further reduce official interest rates in coming months. In 2026, we expect the RBA to cut the cash rate again, but this has become a close call as it hinges critically on inflation cooling back towards 2.5%.

It is important to remember that ART does not design long-term 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 shorter-term opportunities that inevitably emerge during times of heightened market volatility.

Over the quarter, our Dynamic Asset Allocation (DAA) strategy increased our exposure to sovereign bonds in favour of a reduction in our equity and cash allocation. However, we also made regular adjustments to DAA positioning in response to market volatility which drove changes in relative value between asset classes.

At the end of September 2025, our DAA strategy 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, US, and Japanese bonds. The DAA strategy’s currency exposure is underweight the US dollar, 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 to help deliver strong, long-term returns, while reducing our members’ exposure to share market volatility.

During the quarter, ART’s private equity team co-invested alongside Partners Group in Techem, a German submetering and energy service company serving 440,000 customers across 13 million dwellings. Submetering incentivises tenants to reduce heat consumption by providing heat cost allocation, driving household cost savings and a reduction in CO2 footprint.

The team also completed a co-investment alongside Nautic Partners in essential healthcare provider KabaFusion. KabaFusion is a scaled North American provider of acute, chronic, and enteral home infusion therapies, treating chronic illness patients across 44 US states.

Additionally, ART extended its private equity mandate with the Queensland Investment Corporation (QIC) by US$600 million. The mandate will focus on venture capital, growth equity and lower mid-market fund and co-investment commitments that are smaller in scale than ART typically targets directly.

ART’s Real Estate team continues to seek investments that are accretive from a risk-adjusted returns perspective and contribute positively to portfolio diversification. During the quarter, ART’s Real Estate team committed ~US$200m to a market-leading land aggregation platform focused on acquiring real property interests beneath mission critical infrastructure assets in the US. The platform will target digital, renewable energy and transportation sectors to build a high-quality and diversified portfolio that generates stable, long-term returns.

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1. After investment fees and costs, transaction costs and tax, but before administration fees.

2. Representatives of ART Financial Advice Pty Ltd (ABN 50 087 154 818 AFSL 227867) give financial advice. ART Financial Advice Pty Ltd is responsible for the advice it gives and is a separate legal entity. Read the Financial Services Guide for more information.