12 May 2025
Active Opportunity Set Review – March 2025 Fund Performance
Summary
- Global cross asset volatility spiked in March quarter 2025. Significant equity draw dawn was evident in March as investors repriced financial assets generally and risk assets in particular to account for great policy uncertainty from the Trump administration. The repricing of equities led to increased equity risk premia in the US stocks (US tech stocks in particular) although at the end of March 2025, equity market in the US remained expensive relative to history.
- As expected, this type of exogenous shock created significant dispersion across different sectors of the stock market which led to a notable spike in cross-sectional dispersion in manager performance. Domestically, the median Large Cap Manager in the Foresight Analytics & Ratings universe of 143 managers delivered a median return of -2.8% (index -2.9%) over the quarter and 1.3% (index 2.6%) over the year. The dispersion between the top and bottom 5 managers was very significant (around 7% on average). In the Australian Small Cap land, the median manager delivered -2.5% return for the quarter compared to -10.4% delivered by the MSCI Small Cap Index.
- In global equity landscape, the median manager in the Foresight Analytics & Ratings universe delivered – 2.3% return (index -2.3%) for the quarter and 9.8% (index 12.55%) for the year. This dispersion between top and bottom performing managers was very high, almost twice as high as the domestic large cap manager universe. In the Emerging Markets, the median manager delivered 1.9% return for the quarter and 1% for the year. Manager performance dispersion was not as high as in in global equities. In Global Listed Infrastructure, the median manager in the Foresight Analytics & Ratings Universe of 34 managers delivered 5% return for the quarter and 14.5% return for the year (unhedged). The GLI index (unhedged) delivered 6.1% return for the quarter and 21% for the year. The hedged versions of the same index delivered much lower, 2.2% for the quarter and 11% for the year. GLI was one of the best performing asset classes in March quarter apart from Gold.
Economy
- The March 2025 quarter was shaped by a series of key economic and political developments that significantly impacted global bond and stock markets. One of the most consequential shifts came from escalating trade tensions, particularly the S. administration’s decision to impose 25% tariffs on steel and aluminum, along with additional tariffs on a wide range of Chinese imports, a universal 10% tariff, and a range of reciprocal tariffs across a vast swath of trading nations. US tariff policy continues to escalate and vacillate on an almost daily basis. These protectionist moves ignited fears of a trade war, weighing on investor sentiment and increasing market volatility.
- Concerns have rapidly intensified over inflation and economic slowdown, prompting investors to shift focus toward defensive assets. Hedge funds notably pared back exposure to trade-affected sectors, favouring defensive plays in utilities, healthcare, and consumer staples. Tech stocks have pulled back in a high-beta fashion. As an example, the Roundhill Magnificent Seven ETF has fallen as much as 30% from its high in mid-December 2024.
- The stock market reaction was swift and severe. Major U.S. indices, including the S&P 500 and NASDAQ, showed heightened volatility, as evidenced by the table below:
Bond markets, meanwhile, reflected increasing caution. Yields on U.S. Treasuries edged lower as investors sought safe-haven assets, anticipating that higher tariffs could dampen global growth and potentially slow inflation in the medium term. This sentiment was reinforced by the U.S. Federal Reserve’s decision to hold rates steady at 4.5%, signaling a pause in its tightening cycle amid mounting economic uncertainty.
Globally, other central banks followed suit. The Reserve Bank of Australia hinted at a 25-basis point rate cut in response to softening domestic demand and global headwinds. This dovish turn helped support bond prices but raised questions about long-term inflation targets.
Overall, the quarter highlighted a fragile balance between inflation concerns, geopolitical instability, and central bank responses. While equity markets remain fundamentally strong, investor caution has increased, and attention is now turning to upcoming corporate earnings and further policy decisions that could determine the market’s direction in the second half of the year.
| QQQ | SPY | QQQ | SPY |
| Date | Invesco QQQ, NASDAQ 100 | SPDR S&P 500 ETF Trust | % chg | % chg |
| Q4-24 High | 16-Dec-24 | 538.17 | 606.79 | .. | .. |
| Q4-24 Close | 31-Dec-24 | 511.23 | 586.08 | -5.01% | -3.41% |
| Q1-25 Low | 13-Mar-25 | 468.34 | 551.42 | -8.39% | -5.91% |
| Q1-25 Close | 31-Mar-25 | 468.92 | 559.39 | 0.12% | 1.45% |
Bond markets, meanwhile, reflected increasing caution. Yields on U.S. Treasuries edged lower as investors sought safe-haven assets, anticipating that higher tariffs could dampen global growth and potentially slow inflation in the medium term. This sentiment was reinforced by the U.S. Federal Reserve’s decision to hold rates steady at 4.5%, signaling a pause in its tightening cycle amid mounting economic uncertainty.
Globally, other central banks followed suit. The Reserve Bank of Australia hinted at a 25-basis point rate cut in response to softening domestic demand and global headwinds. This dovish turn helped support bond prices but raised questions about long-term inflation targets.
Overall, the quarter highlighted a fragile balance between inflation concerns, geopolitical instability, and central bank responses. While equity markets remain fundamentally strong, investor caution has increased, and attention is now turning to upcoming corporate earnings and further policy decisions that could determine the market’s direction in the second half of the year.
Large-Cap Domestic
Australian Large Cap EQ Top 5
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| Paradice Equity Alpha Plus | 0.37 | 12.99 | 10.43 | 1.25 | 0.99 |
| MA Equity Opportunities | -3.04 | 12.73 | 9.93 | 1.28 | 1.2 |
| Australian Equities Extension Fund | -3.13 | 11.36 | 12.03 | 0.94 | 1.13 |
| Acadian Aust Equity Long Short-Class A | -3.52 | 10.2 | 12.68 | 0.8 | 0.76 |
| Pendal Horizon Sustainable Aus Shr | -1.97 | 8.34 | 10.42 | 0.8 | 0.95 |
Australian Large Cap EQ Bottom 5
| Ellerston Australian Share Fund | -9.63 | -11.58 | 14.39 | -0.8 | 0.9 |
| Bennelong Australian Equities | -11 | -10.04 | 16.91 | -0.59 | 0.99 |
| Bennelong Concentrated Australian Eq | -10.41 | -9.77 | 17.02 | -0.57 | 0.89 |
| Intelligent Investor Aust Eq Gr ETF | -5.48 | -7.72 | 9.77 | -0.79 | 0.97 |
| CFS Platypus Australian Equities | -10.86 | -7.23 | 17.18 | -0.42 | 0.95 |
| Average of Peers AEQ | -3.32 | 1.76 | 11.37 | 0.18 | 0.74 |
| Median of Peers AEQ | -2.83 | 2.48 | 10.88 | 0.24 | 0.8 |
- Growth assets generally did poorly in 2025. Australian Large Caps were no exception.
- The best 5 managers were down 2 to 3% while the worst 5 were down around 10% vs a peer average of – 3.32% (n=143).
- Volatility was notably lower amongst the Top 5 (averaging around 11%) compared to a much higher 15% for the bottom 5. Idiosyncratic risk likely played a part in this – wide divergence in individual stock performances. The overall peer average was 11.37% (n=143).
Small Caps – Domestic
Australian Small Cap EQ Top 5
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| NovaPort Smaller Companies | 38.97 | 55.11 | 38.5 | 1.43 | 0.9 |
| Saville Capital Emerging Companies | -12.2 | 42.82 | 32.28 | 1.33 | 2.25 |
| Ophir Opportunities | 2.69 | 28.67 | 10.7 | 2.68 | 1.23 |
| Surrey Australian Equities Fund | 4.07 | 27.03 | 11.59 | 2.33 | 1.2 |
| Lennox Australian Microcap Fund | 11.92 | 26.85 | 15.37 | 1.75 | 1.3 |
Australian Small Cap EQ Bottom 5
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| EGP Concentrated Value Fund | -10.68 | -22.41 | 11.5 | -1.95 | 0.37 |
| Ganes Focused Value | -10.13 | -15.45 | 14.42 | -1.07 | 1.38 |
| Bennelong ex-20 Australian Equities | -13.61 | -14.68 | 20.24 | -0.73 | 0.98 |
| Bennelong WS Plus ex-20 Aus Eq | -13.44 | -14.14 | 20.13 | -0.7 | 0.82 |
| Contact Australian Ex-50 | -8.99 | -13.73 | 13.71 | -1 | 0.8 |
| Average of Peers SMAEQ | -2.76 | 2.95 | 12.18 | 0.26 | 1.12 |
| Median of Peers SMAEQ | -2.49 | 1.28 | 11.42 | 0.11 | 1.18 |
- Small caps had a widely divergent Q1.2025 among the Top5. Less so for the bottom 5, who were more consistent in their poor performance (-10% +/- 2 or 3 %). The overall peer average was -2.76% (n=119).
- Very large differences in average performance: +9.0% for the Top 5 vs -11.4% for the bottom A spread of over 20% in a single 3-month period.
- The differences are also stark for the 12 months: +36.1 for the top band, and -16.1% for the bottom A spread of 52.2%!! A reminder of the risk levels in small cap stocks.
Global Equities
Global Large Cap EQ Top 5
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| Plato Global Alpha A | 2.21 | 29.14 | 10.45 | 2.79 | 0.88 |
| i Capital International Value | 16.85 | 25.65 | 19.56 | 1.31 | 2.99 |
| IFP Global Franchise Fund | 6.49 | 25.43 | 13.18 | 1.93 | 1.26 |
| BetaShares Global Income Leaders ETF | 7.92 | 24 | 10.48 | 2.29 | 0.45 |
| Lakehouse Global Growth Fund | -1.66 | 22.99 | 15.72 | 1.46 | 1.3 |
Global Large Cap EQ Bottom 5
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| Martin Currie Glbl LT Uncon A | -7.23 | -10.78 | 12.23 | -0.88 | 0.95 |
| BetaShares Crypto Innovators ETF | -27.97 | -9.99 | 65.4 | -0.15 | 0.67 |
| BetaShares Glb Rbtc & Artfcl Intlgc ETF | -12.05 | -6.47 | 16.02 | -0.4 | 0.57 |
| Global X Battery Tech & Lithium ETF | -7.54 | -5.98 | 14.49 | -0.41 | 0.69 |
| Abrdn Sustainable International Equities | -6.47 | -3.8 | 9.87 | -0.38 | 0.98 |
| Average of Peers IEQ | -2.1 | 9.32 | 12.46 | 0.93 | 0.88 |
| Median of Peers IEQ | -2.23 | 9.79 | 10.67 | 0.84 | 0.91 |
Emerging Markets
Emerging Markets Top 5.
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| SPDR S&P Emerging Mkts Crb Aware ETF | 1.32 | 18.14 | 9.39 | 1.93 | 0.35 |
| UBS Emerging Markets Equity Fund | 5.7 | 18.11 | 11.89 | 1.52 | 1.2 |
| RQI Emerging Markets Value-Class A | 5.23 | 16.9 | 9.3 | 1.82 | 0.68 |
| Lazard Emerging Markets Equity I | 5.02 | 16.51 | 7.44 | 2.22 | 1.15 |
| Vanguard FTSE Emerging Markets ETF | 2.11 | 16.07 | 7.86 | 2.05 | 0.48 |
Emerging Markets Bottom 5
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| GQG Partners Emerging Markets Equity Z | -1.47 | -1.27 | 9.66 | -0.13 | 0.86 |
| Warakirri Global Emerging Markets | 0.36 | -0.66 | 7.79 | -0.08 | 1.25 |
| Stewart Investors Global EM Ldrs Sstby | -6.3 | 0.58 | 9.32 | 0.06 | 0.77 |
| Capital Group New World Hedged (AU) | 1.41 | 1.36 | 8.31 | 0.16 | 0.85 |
| Walter Scott Emerging Markets Fund | 2.4 | 2.75 | 8.5 | 0.32 | 1.28 |
| Average of Peers EMKT | 2.07 | 9.52 | 8.98 | 1.09 | 0.98 |
| Median of Peers EMKT | 1.93 | 10.59 | 9.02 | 1.22 | 1 |
- Returns: Top 5 Global beat Top 5 EM over the quarter (6.4% v 9%) and the year (25.4% v 17.1%).
- But for the Bottom 5 managers, EM did considerably better than Global (for the quarter, -0.72% v -12.25%, and for the year, +0.55 v -7.40%)… The 3-month peer average was 2.07% and 1 year was 9.52% (n=36).
- Global was also more volatile and had worse Sharpe ratios than
Small Caps – Global
Global Small Cap EQ Top 5.xlsx
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| Ophir Global Opportunities A | -1.29 | 25.81 | 17.52 | 1.47 | 1.23 |
| Ophir Global High Conviction A Monthly | -2.06 | 24.09 | 18.53 | 1.3 | 1.48 |
| Cromwell Phoenix Global Opportunities | 2.08 | 21.84 | 6.69 | 3.26 | 0.9 |
| Microequities Global Value Microcap | 1.78 | 13.24 | 13.47 | 0.98 | 1.8 |
| Pengana High Conviction Equities B | -30.19 | 10.06 | 36.61 | 0.27 | 1.25 |
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| Pengana WHEB Sustainable Impact | -4.77 | -9.63 | 12.21 | -0.79 | 1.35 |
| Fisher Invmt Australasia Glbl Sm Cp Eq Z | -7.17 | -6.24 | 16.3 | -0.38 | 0.63 |
| Polen Capital Global Small and Mid Cap | -6.08 | -4.27 | 15.93 | -0.27 | 1.3 |
| Fairlight Global Small & Mid Cap Hedged | -3.18 | -3.78 | 13.96 | -0.27 | 1.37 |
| Paradice Global Small Cap Fund | -2.69 | -2.72 | 16.21 | -0.17 | 1.25 |
| Average of Peers SMIEQ | -4.51 | 4.26 | 14.87 | 0.33 | 1.09 |
| Median of Peers SMIEQ | -3.2 | 3.91 | 14.59 | 0.25 | 1.22 |
- Global Small caps did not do as well (on average) as their domestic siblings amongst the Top 5 on both the quarter and the year. However, they displayed considerably less downside for the bottom 5 performers Mar Quarter: -4.8% for Global vs -11.8% for Domestic; 1 Year: -5.3% for Global vs -16.1% for Domestic… The 3-month peer average was -4.51% and 1 year was 4.26% (n=31).
- Volatility was generally lower for both camps in Global Smalls compared to
- Sharp ratios were impressively high for the best performers in both Global (1.46) and Domestic (1.90).
Real Assets
Infrastructure
Global Infrastructure Top 5
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| Resolution Capital Global Listed Infrs A | 6.41 | 24.86 | 12.28 | 2.02 | 0.7 |
| Maple-Brown Abbott Global Listed Infras | 8.54 | 21.5 | 11.33 | 1.9 | 0.98 |
| Ausbil Global Essential Infras - Unhdg | 4.04 | 21.17 | 13.04 | 1.62 | 1 |
| Macquarie True Index Global Infra Secs | 5.1 | 20.21 | 11.04 | 1.83 | 0 |
| Vanguard Global Infrastructure ETF | 5.3 | 19.62 | 12.71 | 1.54 | 0.47 |
Global Infrastructure Bottom 5
| Fund | 3 m Return | 1 Yr Return | 1 yrStdDev | 1 yr Sharpe | Management Fee |
| Macquarie Global Infrastructure Trust II | -2.6 | -10.65 | 7.48 | -1.42 | 2.3 |
| Dexus Core Infrastructure H | 2.12 | 1.88 | 5.4 | 0.35 | 1.33 |
| ClearBridge RARE Emerging Markets | 1.75 | 2.21 | 10.79 | 0.2 | 1.23 |
| TRUE Infrastructure Fund | 0.06 | 3.11 | 8.19 | 0.38 | 0.85 |
| HF Emerging Markets Fund | 2.48 | 3.49 | 7.44 | 0.47 | 1.24 |
| Average of Peers GINF | 4.32 | 13 | 10.29 | 1.37 | 0.89 |
| Median of Peers GINF | 5.01 | 14.54 | 11 | 1.32 | 0.99 |
- As a defensive asset, Infrastructure lived up to its reputation in this volatile and uncertain
- Provided higher returns than Global Equities and
- At much lower volatility than Global Equities and
- Resulting in better Sharpe Ratios than Global Equities and
- The 3-month peer average was 32% and 1 year was 13.00% (n=34).
