General advice warning:
The information in this update is of a general advice nature only and has been prepared without taking into account your personal objectives, financial situation or needs. Because of that, you should, before acting on the advice, consider the appropriateness of the advice, having regard to those things and seek advice and assistance from a qualified financial adviser.
January Show 2026
A look back at 2025 and what to look out for in 2026
Underlying Influences as we head into 2026
Looking into 2026, what are some key economic themes to look out for?
International
- What will the Fed in the USA do about their interest rates and inflation?
- What will happen between Trump and Powell?
- AI related companies are growing at unprecedented rates and need to deliver on productivity gains.
- There are geopolitical flashpoints everywhere.
- The cost of everything just keeps going up.
Australia
- We expect to still see ongoing housing concerns with an unaffordable issue for the next and future generations.
- How will AI benefit companies and employment?
- Who will be our trading partners?
- The world has some uncertainty in the world order, and we tend to supply resources to them all.
- The cost of everything just keeps going up.
- How do we deal with an aging population?
What to look out for in 2026
Beware or embrace the rise of Index investing
Index investing risks include market-cap concentration, limited downside protection, and forced exposure to overvalued stocks. Investors cannot avoid declining sectors or poor governance. Returns fully reflect market downturns, while structural changes, bubbles, or index rebalancing can amplify losses and reduce diversification benefits.
Only 29% of active investment managers beat the index according to the SPIVA Australian Mid-Year 2025 Scorecard.
Beware the rise of Private Equity investments
Private equity risks include illiquidity, long investment horizons, high leverage, valuation opacity, manager dependence, and limited transparency. Returns are sensitive to economic cycles, interest rates, and exit conditions. Capital can be locked up during downturns, amplifying losses and reducing portfolio flexibility.
Look under the bonnet of the ETF
ETF investing has produced low cost, faster to market and lower transaction costs.
It is important thought to have a good understanding and know what they are investing in. There is a number of smart beta approaches that in our opinion could replace active managers. But there could be some that potentially use an ETF wrapper to hide the underlying investments.
Beware of Unlisted Assets that can seem attractive if markets become volatile
Unlisted assets carry illiquidity, valuation uncertainty, and long investment horizons. They are often less transparent, with limited public information, making performance monitoring difficult. High leverage, manager risk, and dependence on successful exits amplify losses. Market downturns can delay liquidity, locking capital and reducing portfolio flexibility.
Take some profits
You will need some strategy to accept volatility and lock in some gains. When we go over the look back at 2025, that year certainly was one for the history books on unpredictability. With so much uncertainty on the geopolitical front one thing is for sure 2026 will have a lot of surprises.
You cannot predict markets, but you can plan for them
Major market indicators – How did 2025 play out?
| 31-Dec-25 | 30-Nov-25 | 31-Oct-25 | Qtr change | 1 year change | |
|---|---|---|---|---|---|
| Interest Rates (at close of period) | |||||
| Aus 90-day Bank Bills | 3.71% | 3.65% | 3.56% | 3.58% | +13.0 |
| Aus 10yr Bond | 4.76% | 4.42% | 4.23% | 4.30% | +46.2 |
| US 90-day T-Bill | 3.57% | 3.73% | 3.73% | 3.86% | -29.0 |
| US 10 yr Bond | 4.16% | 4.02% | 4.10% | 4.15% | +1.5 |
| Currency (against the AUD) | |||||
| US Dollar | 0.667 | 0.656 | 0.655 | 0.663 | 0.62% |
| British Pound | 0.497 | 0.494 | 0.498 | 0.492 | 1.18% |
| Euro | 0.570 | 0.564 | 0.566 | 0.563 | 1.39% |
| Japanese Yen | 104.53 | 102.29 | 100.83 | 97.81 | 6.87% |
| Trade-Weighted Index | 62.20 | 61.20 | 61.20 | 61.30 | 1.47% |
| Equity Markets | |||||
| Australian All Ordinaries | 1.3% | -2.5% | 0.5% | -0.8% | 10.6% |
| MSCI Australia Value (AUD) | 2.7% | -3.0% | 2.0% | 1.6% | 13.6% |
| MSCI Australia Growth (AUD) | -0.9% | -3.8% | -1.9% | -6.5% | -4.3% |
| S&P 500 (USD) | 0.1% | 0.2% | 2.3% | 2.7% | 17.9% |
| MSCI US Value (USD) | 0.8% | 1.8% | -0.9% | 1.6% | 13.7% |
| MSCI US Growth (USD) | -0.7% | -1.4% | 5.1% | 2.9% | 21.1% |
| MSCI World (USD) | 0.8% | 0.3% | 2.0% | 3.2% | 21.6% |
| Nikkei (YEN) | 0.3% | -4.1% | 16.7% | 12.2% | 28.7% |
| CSI 300 (CNY) | 2.5% | -2.4% | 0.2% | 0.2% | 21.0% |
| FTSE 100 (GBP) | 2.3% | 0.4% | 4.1% | 6.9% | 25.8% |
| DAX (EUR) | 2.7% | -0.5% | 0.3% | 2.6% | 23.0% |
| Euro 100 (EUR) | 1.1% | 0.1% | 3.1% | 4.3% | 22.5% |
| MSCI Emerging Markets (USD) | 3.0% | -2.4% | 4.2% | 4.8% | 34.4% |
| Commodities | |||||
| Iron Ore (USD) | 1.9% | -0.8% | 3.7% | 1.1% | 6.2% |
| Crude Oil WTI U$/BBL | -2.3% | -5.1% | -2.2% | -7.3% | -21.0% |
| Gold Bullion $/t oz | 3.0% | 5.6% | 3.8% | 8.7% | 64.7% |