REI Super's Balanced option, where most of our members are invested, delivered a strong one-year net return of 8.70%, FYTD 4.42% and the last three months it returned 1.01%. Our Pension Balanced option returned a one-year net return of 9.74%, FYTD 4.95% and a 1.07% return for the last three months.
The outlook for 2026 remains uncertain amid trade tensions, shifting central‑bank policy, rising inflation risks, and potentially a continuation of the change in equity market leadership.
Australian shares
The second quarter of 2025 saw the S&P/ASX 200 fall 1.0%; however, across the year it was positive 10.3%. Quarterly numbers were dragged down by the Information Technology sector (23.7%) as well as the Consumer Discretionary sector (-11.5%), whilst Materials was one of the few sectors posting a positive return for the quarter, up 13.0%.
Global shares
Global equities finished the year positively with the MSCI ACWI ex Australia Net Returns AUD delivering +2.7% across the final quarter and +13.7% over the calendar year. Notable contributions came from Korea on the emerging markets front as well as the U.K and Japan in developed markets.
Several developed markets (Austria, Ireland, Finland & Spain) posted double digit returns over the final quarter of 2025. Of the larger markets, the U.K and Japan were up +7.1% and +9.6% respectively across the final quarter. Sector-wise, Healthcare was the standout, returning +10.8% over 3 months. Communication Services was the best performer over the 2025 calendar year (+31.0%) with Consumer Discretionary (+6.4%) and Consumer Staples (+5.6%), the laggards but still delivering positive single digit returns across the year.
Emerging markets delivered a powerful performance over 2025, up 24.0% in Australian dollar terms and 31.3% in local currency. Korea was the clear standout for the quarter (+30.7%) and the year (+95.6%). China sold off in the final quarter of the year, down –7.6%, however, posted a solid +30.5% across 2025. Sector-wise, Information Technology and Materials again stood out for the quarter and the year, with EM IT up +19.3% over 3 months and +50.1% over the year, and EM Materials posting +11.0% for the quarter and +55.4% across the year.
Once again, the MSCI ACWI ex Australia’s performance highlights the strength of global diversification.
Bonds
Over the past 3 months, the Bloomberg AusBond Composite 0+Y Total Returns AUD sold-off slightly (-1.2%) for the quarter, as inflation spooked the markets and yields rose, while the 1-year performance stood at a stronger +3.2%. In comparison, the Bloomberg Global Aggregate Total Returns Hedged AUD was stronger across the quarter and the year, delivering +0.7% over 3 months and +4.4% over the year.
Global property & infrastructure
The S&P/ASX 300 A-REIT Total Returns, like the overall market, was down for the quarter (-1.2%), while performance over one year was a respectable +9.7%, concluding a solid but less than spectacular year for Australian real estate investment trusts. The S&P Global Infrastructure Net Returns Hedged AUD was up again over the final quarter of 2025 (+2.2%), and delivered a robust +17.2% over the year, highlighting strong global infrastructure demand. Meanwhile, the FTSE EPRA Nareit Developed ex Australia Net Returns Hedged AUD was flat for the quarter, with a modest 1-year return of 7.5%.
Currencies
By the end of 2025, the Australian dollar had strengthened against most major currencies across the year, up against the USD, EUR, and the JPY, while remaining broadly stable but slightly higher against the GBP. The year‑over‑year increases reflect the AUD’s solid performance through the final quarter of 2025, supported by relatively high Australian yields and resilient domestic conditions.
Changes to the Balanced Portfolio over the December quarter
Reduced exposure to high-performing valuation opportunities, specifically in China Tech Equities and Korean Equities.
Reallocated into more attractive valuation opportunities, including Brazilian Equities
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Outlook
Markets can shift quickly, with geopolitics, economic data, and sentiment all capable of turning abruptly. As we move into 2026, many investors will naturally look for certainty, but placing too much confidence in precise predictions can be counterproductive. Trade tensions and tariff risks remain key swing factors, while diverging central bank policies will continue to influence market dynamics.
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