Towards the end of 2024, share markets were still reaching new record highs, driven up by the buzz around Artificial Intelligence and technology developments coming from the United States.

So far in 2025, share markets have jumped around a lot. Following a peak in mid-February, share markets in Australia and the United States declined and, in early April, dropped sharply.

The dips and unpredictability can mostly be linked back to US “mega tech” AI-themed companies losing their shine, as investors started to wonder whether they were likely to see returns from all the money being spent on propelling this technology forward.

We explained our reluctance to invest in companies with extremely high valuations towards the end of last year. This approach to not overpaying for investments can help to soften falls because reasonably priced investments don’t have as far to fall. 

The April 2025 market correction

Then there was a sharp drop in share prices in April – a reaction to US President Donald Trump’s announcement of significant tariffs on the US’s global trading partners. These are expected to result in a reduction in global trade and a slowdown in economic activity, which isn’t good for the earnings of companies. Investors sold shares in companies on the news to avoid losses.

We have experienced falls of a similar magnitude, including at the beginning of the pandemic, the 2008 global financial crisis and the 1987 stock market crash. In each of these instances, markets recovered and have grown to reach new highs.

Our super options have navigated the unpredictability by firstly ensuring we are not overpaying for investments, and also having a mix of investments, not just in shares, but in more stable assets like fixed income and more predictable private markets.

*Option returns are net of fees and tax. CPI benchmarks are gross. Returns are for the periods outlined to the end of 31 March 2024. Past performance is not a reliable indicator of future performance.

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Silver linings for long term investors

Share market drops aren’t always bad for investors, particularly if you take a long-term view and can put the current share price declines into perspective.

In this environment, we are finding quality companies and projects to invest in at cheaper prices. Making new investments or buying more in companies we are already invested in has been a recent focus in the wake of all the volatility.

There have also been some positives for our way of investing to come out of the recent uncertainty and investment market reactions.

For instance, fashion companies – part of the ‘consumer discretionary’ investment category – dropped further than the rest of the market during the April sell-off. This is because of the negative effect Trump’s tariffs are expected to have on companies with revenues linked to global trade. Our Ethical Charter steers us away from companies in this category, which helped our returns relative to the broader market returns.

Also, fears of a global economic slowdown, brought about by Trump’s tariffs, can put downward pressure on energy consumption, which in turn brings demand for oil and fossil fuel energy down, areas our Ethical Charter also steers us away from investing in. Exclusions in these areas can help our returns too.

Share market ups and downs happen, and investors who sell out after heavy market falls could risk 'locking in' losses and thereby miss out on a possible recovery. We outlined some tips if you’re checking your investment performance or considering which investment option is right for you. 

The dips and unpredictability can mostly be linked back to US “mega tech” AI-themed companies losing their shine, as investors started to wonder whether they were likely to see returns from all the money being spent on propelling this technology forward.