Staying strong in a volatile market

In recent weeks, there has been increasing media coverage of President Trump’s tariffs and the state of the global economy. While some headlines may be alarming, it’s important to keep the situation in perspective. NGS’ Chief Investment Officer, Ben Squires, breaks down what’s happening and how it impacts NGS Super members.

Trump’s tariffs

Tariff talk has dominated the news of late, but what does it all mean? Since taking office, President Trump has implemented various policies that are impacting the global economy, including the rapid increase in tariffs. Australia is not exempt from the new tariffs, including on our steel and aluminium industries. However, the impact is small, with less than 1% of exports going to the US. At this stage, Australia is not imposing reciprocal tariffs on the US, as some other countries have. Ideally, this would be a stance we maintain, as history shows this strategy can lead to a trade war whereby tariffs continue to increase – something we would want to avoid. However, Australia can’t fully escape the impacts of the Trump administration’s decisions, as the effects are being felt globally, with trade slowing down.

Current global market

Global equity markets fell sharply in March as investor concerns mounted over the potential impact of US-led tariff policies and on 2 April, the market sold off when tariffs were announced and were much worse than anticipated. The introduction of aggressive tariffs on foreign goods, followed by retaliatory measures against the US, has raised fears of a slowdown in economic growth and potential recession. The S&P 500, which tracks the largest 500 US companies, declined 4.26% in March and an additional 9.2% in the first week of April, while the tech-heavy Nasdaq fell 6.19% and a further 10.5% in April, led by a selloff in the "Magnificent Seven" stocks.

How is NGS Super responding?

At NGS, our priority is building a resilient portfolio (Diversified MySuper) that can navigate different market environments, such as heightened volatility and equity downturns. By diversifying across asset classes, NGS does not rely solely on share markets for returns. Instead, we construct a balanced, risk-aware portfolio that can weather different economic conditions. Our disciplined approach ensures capital preservation while still participating in long-term market growth. Our priority remains protecting and growing members' wealth. So, when markets turn volatile, our portfolio is well-positioned.

Where and how are NGS investing?

While equities remain a core driver of growth, we actively manage risk through defensive strategies. Relative to the market benchmark weight held in US companies, NGS has maintained a smaller exposure to the US, and this has reduced the impact on the portfolio. Our international share portfolio has declined only 3.87% since February 19 to 26 March 2025, this is compared to a 7.03% drop in the S&P 500 over the same period.

To mitigate downside risk, we employ a multi-asset strategy that balances equities with defensive exposures:

• Gold and precious metals – We maintain an allocation to gold, which has historically performed well during periods of inflation, currency debasement, and market uncertainty. Gold has been the best-performing asset class for the financial year to date (ending 26 March 2025) and has recently hit an all-time high.
• Government bonds – Our higher duration exposure to U.S. Treasuries acts as a protective hedge. These holdings are expected to provide stability, given the weaker economic outlook.
• Hedging strategies – There are other financial instruments that increase in value when share markets fall. This defensive positioning has reduced portfolio volatility and cushioned losses in recent market sell-offs.
• Alternative assets and diversifiers – Our allocations to infrastructure, private credit, and select hedge fund strategies provide low-correlation returns, reducing dependence on equities and bonds.
• Increased exposure to emerging markets – Compared to the US S&P 500's – 7.03% decline, the Chinese CSI 300 index has lost around 0.53% over the same period. In late 2024, we increased our exposure to China, which has contributed positively to portfolio performance.

What can you do if you’re concerned?

In recent years, we have seen strong returns from markets, and a market pullback is not entirely unexpected. While the Diversified MySuper option posted a negative 1.5% return for March and share markets have fallen into correction territory of around a 10% fall in the start of April, the Diversified MySuper option has continued to deliver solid FYTD returns of 4.61% as at 4 April. Despite the sharp declines in equity markets during February, March and into the start of April, long-term performance remains strong.

If you would like to review your investment strategy, it's a good idea to speak to a financial planner.

Talk to a Super Specialist

You can speak with one of our Super Specialists. It's free, and they can answer your general questions about superannuation, investments, insurance or transition to retirement. Seeking advice is a way to plan for your future, to mitigate risks and make the most of your saving opportunities. Education is integral to the planning process – it's important that you feel confident and informed at all times.