The past 12 months have been a bit of a rollercoaster for investors, with events resulting in sharp share market sell offs followed by swift recoveries. 

The ongoing trade tariff disputes in the United States and heightened conflicts in the Middle East have disrupted share market returns in the short-term, yet the markets have proven to surprisingly resilient and bounced back quickly. 

One of the most notable events was the sharp drop in share markets in early 2025, where the S&P500 fell more than 20% from prior highs.  

Remarkably, this decline was largely reversed within a month, and the market subsequently went on to make new highs in June. This resilience seems to highlight the adaptability of markets to shocks and reminds investors to stay the course instead of reacting to short term movements. 

This year of significant volatility demonstrated that a consistent ethical approach, focused on investments that reduce harm and benefit stakeholders beyond financial returns, can also deliver quality investment performance outcomes. 

Australian Ethical Super option returns to 30 June 2025

*Option returns are net of fees and tax. CPI benchmarks are gross. Returns are for the periods outlined to the end of 30 June 2025. Past performance is not a reliable indicator of future performance.

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We have generated these returns while continuing to make a difference with our ethical stewardship. Our strategic stewardship program has engaged ASX-listed companies including QBE Insurance as well as Westpac and National Australia Bank during this period, encouraging these financial institutions to stop financing new fossil fuel projects and move towards a net-zero future. 

How being different has helped 

Our returns in the last year have been helped by some of the unique characteristics defined by our Ethical Charter.  

Our limited exposure to fossil fuel companies and the energy sector has been a positive for our portfolio returns as the economic slowdown globally resulted in lower oil prices and decreased demand for resources. Meanwhile, our limited exposure to tariff-impacted consumer sectors such as fast fashion means we avoided some of the more extreme selloffs in April.  

We have also been cautious about owning highly-priced technology stocks, resulting in us trimming our allocations to the ‘Magnificent 7’¹ and redeploying capital into high-quality opportunities across sectors and asset classes when valuations became unrealistic.  

When share market valuations become too high for us at in early 2025, we started looking for opportunities to provide stability and diversification away from equity markets including in private markets. This led to new private market investments including in Melbourne-based recycling company RepurposeIT, Brisbane-based affordable build-to-rent development 50 Quay Street, and renewably powered US-based Aligned Data Centres. We continue to look for opportunities to invest in private markets where we can invest for a better world while diversifying our portfolios. 

Looking ahead, we expect the next year to be marked by ongoing uncertainty over global trade policy and rising geopolitical tensions. 

Because we are entering this period with share market valuations at the more expensive side of long-term averages, we continue to have a defensive portfolio approach while remaining ready to take advantage of future opportunities as they arise. This means we want to continue to have broad diversification across regions, sectors, and asset classes, with a focus on investing for the long-term. 

The 50 Quay St development in Brisbane featuring affordable build-to-rent apartments is one of our most recent private markets investments which aims to generate investment returns while providing diversification for our portfolios.