How the portfolios performed over the March 2026 quarter

Market sentiment weakened over the March quarter, with global share markets declining after a positive start to the year. Early support from resilient economic growth, easing inflation in several major economies, and solid corporate earnings gave way to a more cautious backdrop amid intensified geopolitical tensions in the Middle East. The resulting rise in oil prices added to inflation concerns and contributed to a broader risk-off environment, weighing on investor confidence. 

Australian shares experienced volatility and ultimately finished lower. Early gains were supported by firmer commodity prices and strength in materials and energy, alongside resilient earnings in financials. However, these gains were reversed through March, with broad-based weakness across most sectors. Energy was a notable exception, benefiting from higher oil prices, while interest rate-sensitive areas came under pressure. 

International share markets declined across most regions. Losses were widespread, with the US, Europe and China all finishing lower, while Japan remained more resilient. Technology shares were a notable source of weakness as enthusiasm around artificial intelligence moderated. Emerging markets were also weaker, impacted by higher energy prices and softer investor sentiment. Listed real assets, including infrastructure and global property, delivered gains earlier in the period before easing in line with broader market conditions. 

Fixed interest markets were relatively resilient over the quarter. Bond yields declined in February as softer inflation and more measured central bank commentary supported markets, only to rise again in March as higher oil prices lifted inflation concerns and weighed on bond prices. Investment-grade credit proved more stable, particularly in Australia, supported by attractive income, while higher-yielding segments were weaker amid deteriorating risk sentiment. 

The Partners Short Term and Multi-Asset Income Portfolios posted modest gains during the quarter, while the Medium and Long Term Portfolios declined amid challenging conditions across global markets 

Key Contributors

Key Detractors

Looking Ahead

The investment outlook has become more uncertain as expectations of falling inflation and near-term interest rate cuts are being challenged. Higher oil prices, driven in part by the ongoing conflict in the Middle East, are adding to inflationary pressures, while elevated government debt and broader geopolitical tensions are making it harder for central banks to ease policy quickly. The longer the conflict persists, the greater the risk of sustained energy price volatility and further disruption to global growth and inflation dynamics. With inflation risks still present, share market valuations elevated in some areas, and credit spreads in corporate bond markets remaining relatively tight despite some recent widening — suggesting investors are not being well compensated for taking on additional risk — a more cautious and balanced approach is warranted. 

In this environment, selectivity is key, focusing on companies with reasonable valuations, resilient earnings, and limited exposure to rising energy costs. Infrastructure assets can provide more stable returns through inflation-linked revenues and long-term contracts, while in fixed interest, an emphasis on higher-quality and domestic exposures can support stability as credit conditions become less certain. Despite increased volatility, the foundations for long-term growth remain in place, with ongoing investment in artificial intelligence supporting productivity and periods of market weakness creating opportunities across regions and sectors, reinforcing the importance of diversification and a focus on quality.