Portfolio highlights

As at 30 June 2026:

The portfolio produced a positive return over the quarter as global and Australian share markets rebounded strongly following easing geopolitical tensions. AI-driven investment continued to support technology shares, while Australian property and IT sectors recovered sharply. Bond markets also delivered positive returns, although inflation, higher interest rates and ongoing geopolitical risks remain key challenges for investors.

The Resolution Capital Global Property Securities Fund returned 11.2% over the June quarter. At a fund level, Welltower (+13.9%) was the strongest contributor to returns, adding 1.28%, while Federal Realty Investment Trust contributed 0.73% and returned 16.1%. Vornado Realty Trust was the standout performer, rising 49.5% during the period (though only contributing +0.09%). The fund benefited from exposures to healthcare, data centre and retail property securities through holdings such as Welltower, Equinix, Ventas, Digital Realty Trust and Unibail-Rodamco-Westfield. At quarter-end, the largest positions were Welltower (9.4%), Equinix (7.4%) and Federal Realty Investment Trust (4.8%), reflecting a preference for property sectors supported by resilient demand and structural growth trends.

The Direct Equity ASX20 Replication Portfolio returned 3.6% over the quarter. Strong gains from BHP (+17.9%), Macquarie Group (+26.1%), Wesfarmers (+24.0%) and QBE (+18.7%) underpinned performance as easing concerns around global growth, resilient domestic economic activity and expectations for lower interest rates supported risk assets and cyclical earnings. BHP benefited from stronger commodity markets, while Macquarie advanced on improved sentiment toward capital markets and infrastructure-related earnings opportunities. Wesfarmers continued to demonstrate the resilience of consumer spending, and QBE benefited from favourable insurance pricing conditions. These gains were partially offset by CSL (-18.5%), where concerns around the pace of margin recovery and earnings growth weighed on sentiment. The quarter highlighted the portfolio's exposure to businesses benefiting from improving economic confidence, robust cash generation and pricing power.

US share prices have skyrocketed given robust corporate earnings and AI enthusiasm. US companies are recording their highest annual profit rise of nearly 29% since 2021 according to Factset. The largest US technology companies such as Alphabet, Amazon, Microsoft and Nvidia are rapidly increasing their AI capital investment which is also supporting economic activity. However, US inflation pressures are building given the Iran War’s impact in raising key commodity prices such as oil and fertiliser.

Asian share markets delivered a mixed performance. Japanese and Korean shares delivered strong gains as optimism on AI and broader technology proved to be beneficial. However Chinese shares disappointed with weaker industrial production and retail spending weighing on investor sentiment.

Australian shares made modest gains in May. Concerns that the Australian central bank raised interest rates in May restrained share gains. There were some weak performances from market heavyweights such as CSL. The Health Care sector posted a painful -8.9% return given CSL’s sharp fall. The Utilities sector (-7.6%) also disappointed with higher energy prices squeezing profit expectations. A more encouraging performance was seen in the Resource sector (7.8%) where higher commodity prices boosted profit estimates.

Australia’s economic data is subdued with employment and household spending slowing but inflation remaining stubbornly high. Headline consumer inflation came in at 4.2% in the year to April. Accordingly, markets are still expecting that the Reserve Bank of Australia (RBA) may again raise interest rates this year to restrain price pressures.