Catholic Values Trust & Income Trust update – September Quarter 2025

Catholic Values Trust & Income Trust update: Strong Quarter amid easing market conditions

In this update, David Chen, Portfolio Manager of both the Catholic Values Trust and Income Trust, recaps September Quarter 2025.
The Catholic Values Trust and Income Trust delivered robust September quarter returns of 3.31% and 2.14% respectively, supported by global market gains and policy easing following a US rate cut. Portfolios remain defensively positioned but flexible, balancing downside protection with readiness to capture opportunities as inflation stabilises and the soft-landing outlook continues.

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Transcript:

September Quarter 2025 performance summary

We’ve had a strong September quarter in both the Catholic Values Trust and Income Trust. The Catholic Values Trust was up 3.31% and the Income Trust returned 2.14%. So both very strong results that we are very pleased with.

Global markets performed strongly, extending gains from earlier in the year. Sentiment was boosted following Jerome Powell’s established tone at Jackson Hole, followed by a 25 basis point rate cut in September, confirming that the US monetary policy is shifting back towards easing. Overall, global equities rose around 6% while Australian shares added nearly 4%. Bond markets were a little bit more subdued, but delivered modest positive returns as yields rose slightly across the curve due to a hotter-than-expected inflation print later in the quarter.

Key drivers that drove performance

There were three key drivers this quarter.

First policy easing. The Fed’s rate cut and dovish guidance lifted equity valuations and risk sentiment globally, driving the decision to cut were indicators that the labour market was softening more than expected, with significant revisions to previous periods’ data.

Secondly, resilient economic data. Both the US and Australia continued to show moderate growth and soft landing conditions with unemployment edging high, but still healthy.

And thirdly, inflation stabilisation. While price pressures remain above target, the trajectory is lower, and this encouraged investors to look through the short-term volatility.

In Australia, optimism around consumer demand and robust labour markets supported returns in financials, materials and consumer sectors, and globally, technology and AI linked stocks once again led the charge with the Magnificent 7 rallying nearly 18% through AI development and a solid earnings season.

Current portfolio positioning

Our portfolios remain defensively positioned, so underweight risk assets and overweight fixed income. There are a couple of key reasons.

1. Valuations are at historically high levels, which are predicated on continued monetary easing and
2. Sticky inflation, which could present a big problem if uncontained, as this would limit the number of rate cuts from the central banks.

Overall, we’re keeping the portfolios flexible, ready to capture upside from further policy easing while maintaining downside protection in case inflation or fiscal risks reemerge.

Why invest in the Catholic Values Trust and Income Trust

1. Strong yield. The Income Trust remains well-suited for yield focused investors. It offers strong income through a diversified mix of fixed interest in hybrid securities. With term deposit rates continuing to decline, the Trust continues to deliver returns of at least 1% above the cash.
2. Value driven investing. We invest with purpose, driven by a Catholic values framework that excludes harmful sectors and favours ethical, responsible companies. The Catholic Values Advisory Board provides independent oversight to ensure every investment aligns with Catholic social teaching.
3. A balanced dynamic approach. Our portfolios are diversified and actively managed, not just a set and forget. We adjust the positioning based on economic and market developments, protecting capital in the volatile environments. But staying ready to capture opportunities as they emerge.

Economic outlook

In terms of the outlook for the next quarter, looking ahead to the December quarter, key focus will be on inflation and the timing of further rate cuts.

Markets are currently expecting the next RBA rate cut in early 2026. But that could shift if inflation remains sticky. Global growth is expected to remain resilient, supported by continued policy easing and ongoing momentum in technology and AI. In summary, the outlook remains cautiously optimistic.

We expect the soft landing narrative to continue with both portfolios positioned to benefit from the environment of low rates, stabilising inflation, and steady income generation.

 

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*The text has been edited for clarity.

 

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Disclaimer:

This trust update has been prepared by SG Hiscock & Company (SGH) to provide general information only and is not intended to take the place of professional advice. It does not take into account the investment objectives, financial situation or particular needs of any particular person.

Equity Trustees is the responsible entity for the Catholic Values Trust and Income Trust. Neither SGH, Equity Trustees nor any of its related parties provide any warranty of accuracy. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Information Memorandum before making a decision about whether to invest in this product. Follow the link for the full disclaimer: https://sghiscock.com.au/podcast-disclosures-and-disclaimers/.