Investment Updates

The March 2026 quarter was marked by a widespread decline across global equity markets, with negative returns concentrated in the final weeks of the period. This resulted in a modest decline in portfolio values at the quarter’s end.

As noted in last quarter’s update, the portfolio is managed with a long-term orientation, and periods of short-term volatility are an expected feature of that approach. While market conditions deteriorated sharply toward the end of March, with major indices, including the ASX, S&P 500, and Nasdaq, declining between 2.7% and 7.1%, the portfolio’s performance remained broadly in line with these global movements. At the time of writing, returns have since recovered as markets have stabilised, highlighting the extent to which quarter-end outcomes can reflect timing rather than underlying portfolio resilience.

Responsible investment remains a core element of this approach. While areas excluded on ethical grounds were among the stronger performing sectors during the period, the portfolio remains aligned with a consistent and disciplined framework. Over time, this has supported both competitive financial outcomes and alignment with the long-term objectives that underpin the portfolio.

Thank you for your continued trust.

Daniel Brugaletta
Chief Financial and Operations Officer

Long-Term Fund

Short-Term Fund

Strategic Objective (in accordance with ACF Investment Policy): Long-Term: CPI + 3.9% | Short-Term: AusBond Bank Bill Index + 1%

Charts denote performance of the long-term and short-term strategies in the Main Fund. Extension and Scholarship Funds also invest in accordance with the same long-term strategy, although performance differs slightly between the entities (see above table).

Long-Term Strategy

Short-Term Strategy

The March 2026 quarter was largely shaped by the rise of AI and the uncertainty of war. In this environment, diversification across sectors, geographies, and a range of possible outcomes remains the best defence.r.

Quarterly Insights 

The defensive assets in the portfolio delivered returns ahead of the benchmark and provided stability throughout the quarter. With inflation expectations increasing, these interest rate linked assets are expected to contribute more to overall returns.

The long-term portfolios were negative for the quarter, ranging from -3.1% to -3.6%, reflecting global share market downturns throughout March.

Given that the portfolio excludes fossil fuel energy and defence companies, returns did not benefit from these sectors, which rose in value amid global conflict. At the same time, as momentum in AI-related markets built through the quarter, performance across the technology sector became increasingly uneven, with some companies benefiting strongly while others lagged. Investments with a longer-term focus were not positioned to capture these short-term shifts.

While markets fell sharply at the end of March, returns have since begun to recover. This highlights the importance of staying focused on long-term outcomes rather than reacting to short-term movements.

Over the quarter, Australian shares declined, with the ASX 200 falling 2.7%. This reflected the market response to the Reserve Bank of Australia lifting the cash rate twice, from 3.6% to 4.1%, in an effort to address inflation, which remains above target at 3.7%. Within the market, technology stocks fell sharply, in line with global trends, while the resources sector performed strongly, supported by higher commodity prices.

Global share markets also moved lower over the period. In the US, the S&P 500 fell 4.6%, and the technology-focused Nasdaq declined 7.1%. European and emerging markets also weakened, in part reflecting their reliance on energy imports.

While geopolitical tensions and uncertainty remain, markets are likely to stay volatile – driven as much by short-term headlines as by underlying fundamentals, while rising energy costs will further complicate efforts to balance economic growth.

One hundred per cent of ACF’s investment portfolio is responsibly invested. Each investment is categorised according to the Impact Management Project framework. The impact categorisation is as follows: