The flagship Cornerstone balanced growth portfolio posted a modest quarterly loss of –0.85%¹  amid recent market volatility by sticking to the fundamental principle of diversifying investors’ capital across different assets and strategies to optimise returns. 

The positions that helped most in the uncertain market environment included: 

Active managers: Several of the underlying fund managers used to construct the Cornerstone portfolios performed strongly amid the market volatility. Firetrail Investments’ absolute return fund, for example, achieved a total absolute return of over 6%²  during Q1 2025. The fund aims to generate returns higher than the RBA cash rate over the medium-to long-term by using a strategy which allows it to profit from both rising and falling share prices. 

Gold: The precious metal is a traditional safe haven in times of market volatility and lived up to its reputation by rising to a record U.S.$3,124³  per ounce over the March quarter. Its performance was captured in different ways across the Cornerstone portfolios, including via gold futures. Gold producer Northern Star is also one of the companies in our direct share portfolio.  

Japanese yen: A position in the Japanese currency paid off as it’s a so-called safe haven currency to which investors turn when capital markets are jittery. Its gains over the quarter were boosted by a depreciation in the U.S. dollar, which was triggered by concerns the Trump administration’s policies may cause inflation to rise. The position was later trimmed in recognition it had achieved its benefit.

A number of adjustments were made to the Cornerstone portfolios over the quarter as part of the underlying investment strategies, including: 

Direct shares: In January the 30-stock direct shares portfolio was rebalanced as part of the regular semi-annual frequency. In addition to this, the portfolio’s allocation to the direct shares was modestly reduced to decrease active risk coming into the portfolio after a period of strong performance. 
Global bonds: The portfolios’ exposure to global bonds were increased in January as higher yields pushed their capital value lower to create a buying opportunity. If economies slow in the months ahead, bonds yields are likely to fall, and the capital value of those bond holdings would rise to the benefit of investors.

Global shares: The proportion of our global equity holdings hedged to offset currency movements was raised earlier in the year to capitalise on a potential increase in the value of the Australian dollar. If the currency rises, unhedged global shares lose value when converted back into Australian dollars.

Tariff drama: The Cornerstone portfolios had a relatively low overall exposure to shares by February this year, as a result of a deliberate strategy to cut back while markets remained at record highs over the previous 12 months. As markets began to sell-off in response to U.S. tariffs, we took advantage of buying opportunities when U.S. sharemarkets suffered the worst week since the COVID-19 pandemic in early April, and the worst 3-day streak since the 1980s. 

There were similar opportunities to add high-yield debt investments to portfolios at attractive prices. 

From a big-picture perspective, the risk of a U.S. recession has increased since the beginning of the year. Markets are likely to remain volatile until there is more policy certainty but over time the long-term fundamentals of economic growth and corporate profits will come back into focus for investors. 

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1  Russell Investments
2  Bloomberg
3  Bloomberg