Goal-Based Portfolio Update – Quarter Ending 31 December 2025
Market Update
| January 22, 2026
Quarterly Update and 2026 Outlook
Our Goal‑Based portfolios are designed around timeframes and purpose – and this quarter, each bucket delivered broadly as intended. Here’s a streamlined look at how they performed and what we’re watching heading into 2026.
How the Buckets Performed
Short Term Bucket
Return: ~0.7% for the quarter, 4.7% for the year
This bucket continues to prioritise capital stability and steady income. With credit spreads unusually tight, we made measured shifts into higher-yielding, income-focused credit managers while trimming lower-yielding cash and bond positions. The goal remains unchanged: protect near-term money while earning reliable returns above cash.
Medium Term Bucket
Return: ~0.9% for the quarter, 9.1% for the year
Diversification did its job. Australian shares and inflation-linked bonds lagged, but global shares, property, infrastructure, and alternatives offset domestic weakness. This mix is deliberate – different assets deliver in different environments, reducing reliance on any single market.
Long-Term Bucket
Return: ~0.9% for the quarter, 11.7% for the year
Long‑term portfolios remain heavily invested in equities. Australian shares fell, international shares rose, and manager performance varied – exactly what we expect from a diversified blend of styles. No portfolio changes were required, and the bucket remains well aligned to long‑horizon growth goals.
High Growth
Return: ~2.1% for the quarter, 15.3% for the year
The strongest performer this year. Global equities – particularly large‑cap and small‑cap positions—drove returns. With 100% in growth assets, this portfolio is built for long‑term wealth creation and will naturally experience larger swings along the way.
Key Themes Driving Portfolio Decisions
Short Term: Boosting Income Responsibly
With credit spreads at multi‑year lows, we modestly increased allocations to high‑quality income-focused credit to support return objectives while keeping risk tight.
Medium‑Term: Diversification That Works
Global equities, property, infrastructure, and alternatives balanced out Australian softness -highlighting the value of broad, multi‑asset exposure.
Long‑Term: Natural Manager Dispersion
Growth, value, quality, small‑cap, and passive exposures all delivered mixed results. This is intentional – diversification across styles reduces concentration risk.
High Growth: Riding Global Market Strength
Global equities remained the engine of performance. We kept the structure unchanged given strong long‑term alignment with objectives.
2026 Outlook
Australia: A Different Path to Global Markets
The RBA remains more cautious than other central banks, with the possibility of rate rises if inflation persists. This keeps pressure on rate‑sensitive domestic sectors, while resources continue to benefit from strong commodity demand.
Global Markets: AI Boom vs Valuation Reality
The AI investment surge continues, but valuations (especially in U.S. large‑cap tech), are elevated. We expect moderating forward returns and continue to see value in global small caps, emerging markets, and sectors outside the tech-heavy leaders.
Monetary Policy Divergence Creates Opportunity
As central banks move in different directions, opportunities are emerging across global equities and high‑quality credit. Short‑Term portfolios remain calibrated for realistic return targets in a low‑spread world.
Positioning for What Matters
Our bucket approach remains deliberately structured:
- Short‑Term: Defensive, income‑focused, low volatility
- Medium‑Term: Broad diversification across regions and asset types
- Long‑Term: Equity‑heavy, style‑diversified growth exposure
- High Growth: Fully growth‑oriented for long‑horizon investors
Rather than attempting to forecast short‑term market moves, we stay disciplined within each bucket’s mandate. This ensures your portfolios remain resilient, purposeful, and aligned to the goals they’re designed to fund.
As we move into 2026, we remain committed to our disciplined, outcomes-focused approach. We’ll continue monitoring developments closely and will act decisively when opportunities arise that align with our investment philosophy. In the meantime, your bucket structure continues working exactly as designed.
Thank you for your continued trust in Profusion
