Performance update: Jan-March 2025
How your super performed in the first quarter of 2025.
The year sure got off to a rocky start for investors. We wrote to members in early April regarding market movements, as the US President’s announcement of widespread tariffs sent shockwaves through global share markets. These impacts are felt in the investment returns across the fund during the first quarter of 2025.
The nature of investing is that markets go up and down. Superannuation is a long-term investment, designed to see you through your working life, so market movement is something super funds prepare for.
That being said, let’s dive into what happened.
Tariffs send markets into a spin
After two years of strong gains share markets started 2025 overvalued and vulnerable to bad news. The bad news came in the form of the Trump Administration’s often contradictory policy announcements around tariffs, public sector cutbacks and relations with allies, with tariffs going into hyperdrive over March and April.
The US government implemented or increased a range of tariffs, focusing largely on US imports from Canada, China and Mexico. All aluminium and steel exporters to the US, including Australia, had 25% tariffs imposed on these goods. Given the potential for these far-reaching tariffs to cause price rises and impact economic growth and interest rates, the result has been widespread uncertainty across global markets.
How we’re responding to volatility
As the crisis unfolded the team has been monitoring portfolios. Initially the team moved the strategy to be more defensive, meaning the exposure to shares traded in stock markets is significantly lower than was the case at the start of the year. In addition to this shift, the team decided to increase exposure to foreign currency anticipating that the Australian dollar may fall.
We have also increased our scrutiny of our investment strategies to evaluate their robustness to market stress. While expecting continued challenges the team is prepared for the possibility that markets rebound quickly, perhaps if tariff levels reduce. We want to be positioned to capitalise on the upside when markets bounce back so we’re making sure cash is available to purchase assets in that scenario.
Periods where markets are volatile are not unusual. In just the last five years we’ve seen markets react strongly to Covid waves and the war in Ukraine.
While this market dip is significant, this kind of volatility is something super funds are prepared for and super products are designed to withstand.
Investment performance
Higher potential for growth comes with higher risk. That's why our more defensive (lower risk) options have shown greater resilience to the challenging market conditions during the quarter ending 31 March 2025. They tend to have lower exposure to higher-risk investments such as US equities. These options are designed to carry less risk for those closer to retirement, but if you remained in them for many decades, they would be expected to deliver lower returns overall.
The table below shows smartMonday performance to 31 March 2025. Current returns for our pension investment options can be viewed here.
Performance shown net of investment fees and taxes, annualised performance shown for periods greater than 1 year. Returns are not guaranteed and past performance is not a reliable indicator of future performance. Investments may be held directly, or indirectly through Exchange Traded Funds (ETFs) and other managed investment vehicles.
*Average smartMonday member is 43 years of age, as of December 2024.