An unusual event occurred in April and if active managers didn’t recognise the signs in advance they would have missed an opportunity to increase their returns.

Around the U.S. administration’s first round of tariff announcements, known as Liberation Day, panicked investors sold down global shares by about 20%. As far as selldowns go, this moment in isolation wasn’t particularly unusual but investors felt the impact more.

The knee-jerk sell reaction sparked an investor sentiment tracker to recognise that global share markets were being oversold, and it pointed to the likelihood that a contrarian trade was 99% likely to be successful. Such an occurrence is rare in investment management.

But it’s not a huge shock, either.

It’s been proven many times that long-term investors tend to let their judgement slip when volatility consumes sharemarkets, and once the dust has settled, they return focus on fundamentals. Stepping in and out of the market to time the best and worst days has also proven to be an unfulfilling strategy. For example, investors who remained invested in the S&P/ASX300 Total Return Index in the 10 years to December 2024 would have seen a 126% cumulative return. If you missed the market’s best 40 days, the return fell to -27%¹ .

As an active manager it is crucial to know your portfolio’s position at these moments and know where to pivot to maximise opportunities.

When it came to Liberation Day, increased allocations to contrarian fund managers paid off as these managers generally make money when markets fall.

Going forward, it does look like the tremors from April have subsided. However, an outlook for a weaker U.S. dollar amplifies the case to hedge global shares into local currency and look for attractive opportunities in non-U.S investments across both public and private markets.