Quarterly Investment Report – April 2025

What Could Go Right?

The first quarter of 2025 brought a notable shift in market conditions, driven by renewed geopolitical tension, shifting policy expectations, and deteriorating investor sentiment.

In this environment, it’s easy to focus on what can go wrong. But extreme pessimism often signals a turning point. In this update, we explore why now may be the time to start thinking about what could go right—and how we’ve positioned portfolios to remain resilient and responsive.

Below is a summary of our latest quarterly investment report, “What Could Go Right?”

• Sentiment at extremes may signal an opportunity – Investor pessimism has reached levels not seen since the GFC and COVID-19. Historically, such extremes often coincide with market turning points, making it a time to consider what could go right, not just what could go wrong. 

• Markets sold off sharply on U.S. trade tensions—but are showing signs of stabilising – President Trump’s “Liberation Day” tariffs triggered a swift correction, yet early signs of recovery in April suggest sentiment could shift quickly if policy improves.

• Event-driven bear markets are typically sharp but short-lived – Goldman Sachs categorises the current pullback as event-driven, typically sharp but short-lived. Previous episodes have seen 27% declines followed by recovery within 12 months; we’ve already seen a ~20% drop over two months.

• Valuation resets and domestic resilience offer support for long-term investors – U.S. equities have repriced, with P/E ratios returning to historical norms. At the same time, Australia’s economy has remained resilient, supported by a proactive RBA, easing inflation, and limited exposure to global trade tensions.

• Diversification and dynamic positioning have supported portfolios this quarter – Our strategy of broad diversification, tactical equity purchases close to the April bottom, and rebalancing toward liquid and alternative assets has helped manage downside risk while maintaining flexibility for future opportunities.

The greatest risk during periods like this isn’t the market correction itself, but the temptation to react emotionally and stray from a long-term plan. Warren Buffett wisely noted that successful investing is more about temperament than intelligence.

As always, we’re here to help you stay focused, stay informed, and navigate the uncertainty while remaining ready to act when opportunities arise.

^{General Advice Warning: Any comments in this communication do not consider your objectives, financial situation or needs. Before acting on any general advice, consider whether it is appropriate for you.}