Market commentary: Dec 2025
Portfolio performance
Like the weather 2025 was an unpredictable (and somewhat worrying) year with “Liberation Day” tariffs, geopolitical tensions, and the rapid rise of AI. But our investment returns have been solid. International equities and infrastructure were the driving force with returns of around 14% and 9% for the year. Australasian equities were flat and fixed interest is running at 5%. Decisions based on data and research meant that we navigated the year well and our portfolios are in good shape for whatever comes our way in 2026.
Research in unpredictable times
If the first few days are anything to go by, we’re in for another year of drama and surprises. I’ve already heard the comment “buckle up, we’re in for a hell of ride in 2026”.
The world is changing dramatically disrupting the normal investment rhythms and cycles. We are in an era of heightened unpredictability. It’s more important than ever to remain calm and disciplined when making investment decisions. Markets overreact on the way up and on the way down presenting opportunities to profit either by realising capital gains or buying good companies at bargain prices.
To take full advantage of these over reactions requires thorough research. This applies at two levels. The first is strategic asset allocation (the proportion of shares, infrastructure and fixed interest). The second level is the actual investments in shares and bonds. We use managed funds to get access to these investments.
Our research provider is Makao Investments. They specialise in strategic asset allocation and fund manager selection.
Strategic asset allocation is reviewed every six weeks. We look at two key variables - overall share market price (currently elevated) and market psychology (currently optimistic). These readings indicate the market could be near a peak, so we have trimmed the percentage invested in shares making our client portfolios more conservative.
Our Managed funds are researched and reviewed on an ongoing basis. Research involves desk work and in person meetings with fund managers – both current and prospective. Makao assesses research capability, process, team, culture, skills, operations. The result is a list of investments approved for use in portfolios, and a strategy for each sector of our client portfolios.
Research is an integral part of our business. What happens in this year is anyone’s guess but one thing for sure is that we are not expecting it to be business as usual. We are looking forward to the year ahead and, armed with rigorous research, are prepared for whatever the market delivers.
Richard Grimes, CERTIFIED FINANCIAL PLANNER (CFPCM), Director and Financial Adviser