19 August 2025
This month, we caught up with the Investment Team at AustralianSuper to discuss what’s driving investment markets.
The financial year ending 30 June 2025 delivered generally strong investment performance for superannuation balances, but not without significant volatility. US trade policies and tariff risks were a key driver of the ups and downs experienced by global markets and economies, particularly in March and April.
Ultimately, international and Australian listed shares were the best performing asset classes for the financial year. In the US, the strong growth of corporate earnings drove returns, particularly in tech-related stocks. Despite the impact of tariffs, other large markets, like Europe and China, also- exceeded growth expectations in the first half of 2025.
Unlisted assets – like infrastructure, property, private equity and private credit – generally lagged listed shares. Defensive assets – like fixed income and cash – provided relatively modest but steady returns, as both asset classes benefitted from still-higher interest rates.
Although global markets – with the US economy in particular – have remained resilient in recent months, many investors remain cautious about the lagged effects of tariffs. In the US, there are some signs of potential economic slowing, as well as an uptick in inflation. Similarly in the UK, a higher near-term inflationary outlook has tempered expectations for near-term interest rate cuts.
Central banks face some challenges in their decision-making ahead. Banks generally raise interest rates in response to rising inflation and lower interest rates in response to slowing growth. These policy responses could be at odds with each other in an environment with rising inflation and slowing growth.
US policy changes and their impacts on global activity are, of course, front of mind for investors. As the impact of these policy changes continue to work their way through investment markets, trends in global growth will likely drive returns in the second half of 2025 and 2026.
More broadly, though, we’re focused on some other key thematic trends, like digitalisation, deglobalisation and decarbonisation. Referencing again the US technology-related sector, digitalisation has been a key driver of the recent earnings growth trend. We’re continuing to monitor the impact on productivity as artificial intelligence adoption continues to grow.
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This information may be general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
