Financial markets have experienced plenty of volatility this year. What began as a relatively stable investment environment rapidly evolved into a complex landscape shaped by political upheaval, technological disruption and shifting global trade dynamics.
Investors were forced to reconsider long-held assumptions about where the best opportunities lie.
2025 – Month by Month
January: Markets were rattled as President Trump took office again, issuing a flurry of executive orders. AI disruption surged into focus when Chinese company DeepSeek rivalled major US tech firms at a fraction of the cost, shaking the perceived invincibility of the “Magnificent Seven” tech giants.
February: saw investors become more risk-averse due to concerns about the US economy potentially facing both slow growth and high inflation simultaneously. Meanwhile, Europe showed better earnings results, hopes emerged for a Ukraine-Russia peace deal and China’s technology sector rallied all contributing to money flowing out of US markets.
March: US tariff policy announcements sent shockwaves globally. Investors sought safety in assets like gold, which rose to new highs above US$3,000 per ounce.
April: “Liberation day” tariffs intensified trade tensions, briefly causing a 10% drop in the S&P 500. However, it ended the month only down marginally whilst the Australian market ended up materially higher for the month!
May: A reduction in US-China tariff rates raised hopes of easing tensions. A US trade court blocked some tariffs added optimism, though an appeals court allowed tariffs to continue temporarily. Meanwhile, bond markets grew wary of rising government debt levels.
June: Despite ongoing headwinds including the proposed One Big Beautiful Bill Act (OBBBA) and a brief geopolitical disruption in the Middle East, the S&P 500 reached a record high. Global equity markets, including MSCI World and Emerging Markets, saw broad gains. However, the USD weakened as investors started to trend away from US assets. Meanwhile, Australia’s RBA signaled a potential significant rate cut.
Separating signal from noise
Despite concerns about policy unpredictability, the US economy has remained relatively stable, with most expecting a “soft landing”. Central banks remain cautious, balancing concerns about slowing growth against rising inflation.
It’s more important than ever to separate long-term trends from short-term market noise. Investors should avoid knee-jerk reactions to market swings and maintain steady, consistent approaches to drive long-term performance.
Empire managed portfolio performance
Despite the market turbulence, Empire’s managed portfolios delivered solid returns in FY2024/25. Here is how each performed:
Balanced Income
This portfolio delivered a return of around 10% in the 24/25 Financial Year. Despite the turbulence referenced above, which included some deep share sell offs, equity markets have been our biggest contributor. Allocations to share markets, both Australian and Global, have contributed returns of over 10% through the year.
Balanced Growth
This portfolio has delivered a return of around 10% in the 24/25 Financial Year. Equity markets have been our biggest contributor to returns for this portfolio. However, active positioning in equities has seen mixed results. Australian share managers have generally been betting against the seeming inexorable rise of CBA’s share price, leading to broad based underperformance. In our global portfolio, we’ve seen similar results as the concentration of returns in a narrow set of technology dominated stocks has resulted in our managers, who tend to focus on more value or quality-oriented stocks, to fall behind benchmarks.
Growth
The Growth managed portfolio has delivered a return of around 11% in the 24/25 Financial Year. Equities, our largest exposure in this portfolio, have been our biggest contributor. Our structural passive exposure to share markets, Australian and Global, have all delivered double digit returns over this period. Australian share managers have generally been betting against the seeming inexorable rise of CBA’s share price, leading to broad based underperformance. In our global portfolio, we’ve seen similar results as the concentration of returns in a narrow set of technology dominated stocks has resulted in our managers, who tend to focus on more value or quality-oriented stocks, to fall behind benchmarks.
