How the portfolios performed over the September 2026 quarter

Global share markets posted modest gains in the September quarter, despite an increasingly challenging backdrop. Resilient economic conditions and corporate earnings supported markets, while persistent inflation and renewed tensions in the Middle East pushed oil prices higher. Concerns around interest rates also intensified, particularly in September when both the US Federal Reserve and Reserve Bank of Australia raised rates. Despite these pressures, share markets remained relatively resilient, although rising bond yields weighed on fixed interest markets.

Australian shares delivered modest gains, with performance varying considerably across sectors. Healthcare led the market following improved company earnings, while energy benefited from higher oil prices. Materials also advanced, supported by stronger copper and gold prices. In contrast, higher bond yields weighed on technology and property, while consumer discretionary companies also weakened amid pressure on household spending. Smaller companies underperformed their larger counterparts.

International share markets also recorded modest gains, with the US and Japan among the stronger major markets. US shares benefited from continued enthusiasm for artificial intelligence, supporting technology and other growth-oriented companies. European markets weakened as higher energy costs and interest rate concerns weighed on investor confidence. Emerging markets delivered mixed results, with gains in China and Taiwan offset by declines in India and South Korea, while larger companies generally outperformed smaller peers.

Fixed interest markets declined over the quarter as persistent inflation and expectations of interest rates remaining higher for longer pushed government bond yields higher. Both Australian and global bonds recorded negative returns, with losses particularly pronounced towards quarter end. Australian corporate bonds proved relatively resilient, supported by higher income, while global corporate bonds weakened as investors became more cautious.

The Partners Portfolios delivered mixed returns over the quarter, reflecting the more challenging conditions across financial markets. The Partners Short Term Portfolio delivered a solid positive return, consistent with its defensive investment objective, while the Partners Long Term Portfolio posted a modest gain. The Partners Medium Term Portfolio declined, weighed down by its greater exposure to government bonds and listed infrastructure and property, which came under pressure as bond yields rose. The Partners Multi-Asset Income Portfolio also declined, reflecting its significant exposure to infrastructure and property.

Key Contributors

Key Detractors

Looking Ahead

The global economic outlook remains reasonably supportive, with continued business investment in artificial intelligence, infrastructure, defence and energy security helping sustain growth. However, persistent inflation, higher interest rates and ongoing geopolitical tensions are creating a more challenging environment. Higher borrowing costs are also putting greater pressure on businesses with elevated debt, while cost-of-living pressures continue to weigh on household spending.

In Australia, higher interest rates are weighing on household spending and company earnings, while the share market has less exposure to the technology-driven growth supporting overseas markets. Elevated valuations in parts of global share markets also leave less room for disappointment. Meanwhile, higher bond yields continue to challenge interest rate-sensitive investments, including infrastructure and property, although these assets may benefit if inflation eases and interest rates eventually decline.

Against this backdrop, diversification and careful investment selection remain important. Focusing on quality companies with sustainable earnings and reasonable valuations, alongside higher-quality fixed-income options that offer more attractive income, should help portfolios navigate uncertainty while remaining positioned to benefit from longer-term opportunities.