Monthly Market Update – Jun 2026

This update includes performance data and commentary across asset classes and strategies.

All tables are sorted by 3-month performance by default, with benchmark rows highlighted where relevant.

Data current as of end-Jun 2026

Fixed Income

• Fortlake dropping equity like returns, impressive.
• Cracking returns all round over 3 years, almost half generating +3% over CPI.
• But you can't help but think its a reflection of spreads narrowing like mad.
• Spreads in investment grade credits under 100bps over cash. Everyone going towards "investment grade" for yield.
• High yield comparatively doesn't look entirely so bad in comparison.

Private Credit

• The noise is dying down, well until the next default.
• Property worries me, there are assets that need to settle but simply can't, no buyers...
• Think about how much property prices have drawn down, and what fund LVRs are at today.
• Maybe nothing really happens, but are you being appropriately rewarded taking on risk?
• Allocators still don't give a f about the ASIC review.

Domestic Large Cap

• Less than half the funds here generated positive returns for the year, shocking stuff.
• Decent bounce as tech & discretionary had good quarters, but overall challenging to capture as anyone who held names in those sectors also held healthcare.
• Post tax changes, flows should make large caps interesting, why buy an investment property when you can just buy <insert ETF>.

Domestic Mid/Small Cap

• Tech/growth unwind took a bit of a break this quarter.
• Sector a bit challenged, not sure where incremental flows come from but lots of names are mispriced.
• Some of the big drawdowns (DNR, Paradice) show that there are proper air-pockets and an important reminder of how quickly this end of the market can turn.

Domestic Micro Cap

• No one beat the index over the year!
• Some of these monthly numbers are pretty weak and rolling over.
• Mispricing theme from small-mids is stronger here.

International Equities

• Just under half generated negative returns for FY26, despite the index generating +15%!
• Frazis a tad volatile...
• Rank by 1 year and its a table of who owned the AI winners.
• Quality actually bounced this quarter (QUAL +12%, QSML +12%), but the concentrated quality shops still lagged.
• In large, the more concentrated managers ended up at the bottom of the table.

Infra + REITs

• Property bounced hard (Vanguard Aus prop +13.5% for the quarter) but still a reflection of rates more than anything.
  • Aus Prop is +11% over 3yrs, Goodman carrying almost all of that.
• Infra the sneaky AI trade - lots calling it a diversifier but in reality, just a really nice datacentre/electricity bet.
• Mag-7 concentration risk is nonsense, everyone should be watching for exactly how much AI concentration they actually have.

Other

• The mining funds all ripped, anyone who remotely had any kind of mining exposure did well.
  • In fact other than Tectonic which was an AI trade (aka still commodities in a sense), pretty much everyone from the top-10 had some kind of significant resources exposure.
• Most of the Aussie fundamental long short managers had a horrible year.

GICS Sectors

• BHP carrying materials, +52% for the year.
• So invariably the standard "underweight banks/overweight quality" active manager missed both the bank strength AND the resources rip. Imagine being an Aussie and trying to avoid owning the banks and miners...
• Healthcare now with massively negative numbers over 5 years, that's -36.6% cumulative over 5 years.
• Energy rollercoaster, slammed by an understanding of peace between warring nations. Coming back hard now though.

Crypto

• BTC -49% over the last year, still think it ends up on the front page eventually.

Thoughts of the Month

I got worries on my mind

A brain dump of what's on my mind:

• Oil, I think we're all kidding ourselves if we think this is resolved. Prices are pinned a bit too low.
• Trump himself said "Bedlam in 4 weeks" 4 weeks ago when the MoU was executed. I'm worried for what energy looks like in a month's time.
  • Have you heard about the one where the Iran war was put on pause just so SpaceX could get the IPO done?
• Rates pricing in maybe 1 more rate rise by the end of the year. Oil goes higher, inflation persists, energy cost keeps rising, RBA forced to act.
• A few more months go by, food prices creep higher as no fertiliser and we have a brutal summer due to el nino, RBA can't cut again and maybe rates go higher and higher.
• El nino persists and we have another period of high oil prices and high food costs all while AI datacentre buildout in Aus causes crowding out of the construction sector again. Can't cut again, maybe rates go higher.

Truth is probably somewhere in the middle, the datacentre buildout will be linked to higher gdp growth too.

Datacentre buildout

Potential massive boon for Australia, if we see significant buildout it sounds exciting for GDP Growth. But the frontier of GDP growth is going to be unevenly distributed and the government hasn't quite worked out how to tax hyperscalers yet.

The government really needs to get its act together as they're seemingly concerned about IP that was likely all lost 3 years ago. If Australia can be a "safe" jurisdiction for US based "labs" and hyperscalers, there is so much upside for Aussies. There is convexity in the government getting a deal done, I just hope one can get done in time.

Imagine if we can't get enough trades to build homes because everyone is too busy building datacentres, ha!

Zigging while zagging

This happens every once in a while where you see US tech holdings across institutions fall substantially. It's happening now, on the back of the memory degrossing event.

At some point the money will follow the growth.

Have a look at Amazon for example, they own 20% of Anthropic and get to collect a margin straight off the topline revenue from any instance of Claude run off their servers. You have leverage to the fastest growing company in the world via public markets.

Be aware though that every hyperscaler is going to generate negative free cashflow as they're all investing in the future. There is a good reason why public companies don't usually go negative FCF to invest in the future and this is better kept to private equity, j-curve etc.

Investing in infrastructure for the future is not that bad! But share prices might not necessarily reflect that in the near future.

Do your job

I've just outlined an area that potentially delivers convexity and inoculates against missing out on returns. Timing matters however!

Map it out, AI is here to help, you can get a shocking amount of work done to understand what your portfolio might look like in certain scenarios.

You don't even need to think through stuff, just prompt away to build a framework. Even a partly built thing has more value than doing nothing.

My only suggestion is look at your best performing exposures over the last year and work out what drove performance. You're not avoiding the AI trade by going underweight Mag-7 because some "quality" global equities manager told you so, you've probably picked it up elsewhere. Either via "value" global equities or via infrastructure or via commodities or via credits.

You're long AI - you just don't know it yet.

Thanks

Well done for making it this far and it pleases me you are reading this sentence. I thank you for reading the above and I hope it has provoked some thoughts.

Please feel free to email me on contact@ausyield.com.au if you have any questions.

This publication contains factual information and general commentary only, provided for informational and educational purposes. It does not constitute financial product advice under section 766B of the Corporations Act 2001 (Cth) and has been prepared without taking into account any reader's objectives, financial situation, or needs. Nothing in this publication is intended as a recommendation to acquire, dispose of, or hold any financial product. Readers should consider whether the information is appropriate to their circumstances and seek advice from an appropriately licensed adviser before acting on any content. Ausyield does not hold an Australian Financial Services Licence and does not provide personal financial advice.

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