How the portfolios performed over the March 2025 quarter

The first quarter of 2025 marked a dramatic shift in investor sentiment. The year began on a wave of optimism, buoyed by expectations of continued economic strength in the US. Share markets responded with strong gains, particularly in Europe and the US, as confidence remained high throughout January and early February. However, this positive momentum quickly faded as a combination of escalating trade tensions and growing fears of a potential recession began to unsettle global investors. By late February, concerns about the health of the US economy and speculation over new tariffs weighed heavily on sentiment, prompting a widespread retreat from riskier investments.

Markets turned sharply risk-averse, resulting in steep declines in US shares and widespread weakness across most developed economies, including Australia. While targeted government stimulus programs in regions such as Europe and Asia provided a modest boost to investor confidence, they weren’t enough to offset the rising anxiety. The situation reached a breaking point in early April, on a day that came to be known as “Liberation Day,” when President Trump announced unexpectedly high and far-ranging tariffs. This move triggered one of the biggest sell-offs in global shares since the COVID-19 pandemic.

In contrast, bond markets fared much better during this turbulent period. Expectations that central banks would respond to the downturn with interest rate cuts, along with a flight to traditionally safer assets, helped support bond prices. These gains offered crucial diversification for investors, underscoring the value of maintaining a balanced portfolio strategy during times of market stress.

Despite heightened market volatility, the Partners Short Term, Medium Term, and Multi-Asset Income Portfolios delivered flat to positive returns over the quarter — highlighting the resilience and stability of each strategy. The Partners Long Term Portfolio, which is fully allocated to long-term growth assets such as shares, posted a marginally negative return. However, it still outperformed most major share markets, including Australia, underscoring the portfolio’s relative strength in a challenging environment.  

Key Contributors

Key Detractors

Looking Ahead

As we move further into 2025, markets remain under pressure from geopolitical uncertainty, especially around US trade policy. New tariffs and weaker economic data have raised fears of a broader downturn. While volatility may persist, such periods often set the stage for future opportunities.

Share valuations are now nearer levels that have historically supported stronger long-term returns. However, it’s too early to call a market bottom. We therefore recommend a neutral stance — holding steady exposure to growth assets like shares while monitoring developments closely.

There are still reasons for optimism. If trade tensions ease — whether through negotiation, legal action, or policy changes — markets could rebound quickly. Should prices decline further, we’re ready to increase exposure to growth assets.