Market and Asset Allocation Update – July 2026
CiN-sights Asset Allocation - July 2026
Dynamic Asset Allocation Calls (Quarterly view)
Thoughts - “Information is not Knowledge – Knowledge is not Wisdom” – Frank Zappa
Australian Equities: After the tough March quarter, we saw some rebound in the Aust. Equity market. Our call to be overweight Resources and underweight Financials was vindicated. The market is working through the implications of the budget. Smalls Caps rebounded and we expect the forthcoming quarter to be positive. Consumer confidence in a “K” shaped economy is a headline, but we will watch sales and employment data for a clearer RBA leading indicator signal. Neutral on the ASX 100 and upgrade in the aggregate below that.
US Equities: We are constructive on US markets. The Iran conflagration, despite outbreaks, should settle and the Republicans will want minimal distraction heading into mid-term elections. The AI phenomena is seeing large physical $’s being spent on real business activity and will counterbalance weakness in Consumer Discretionary. Sector wise, we also favour Defence, Robotics, Aged demographics and Climate Change focused sectors. Inflation will be the wild card.
European Equities: Resolution of the Iranian conflagration and falling energy prices will lead to better economic and monetary conditions and confidence. The discount to the US market is still there and is not going away, thus we are not seeing compelling forces to reallocate more funds from the US and EM.
Emerging Markets: With Iran in the rear mirror, we see the EM grouping developing from a macro bet on the global equity and liquidity cycle to more nuanced set of “geopolitical options” in global supply chains etc. China’s growth at 4.5%, long bond rate at 2.2%, tariff absorption etc. points to resilience, despite an imbalanced economy (i.e. soft consumer and property, but strong export and infrastructure sectors).
Property: Reiterating last Q’s comments, we remain at neutral for the Institutional market and negative on the Residential sector. We still see better value in allocating elsewhere.
Private Equity: As Private Equity still shows a negative illiquidity premium when compared to listed equities, (SpaceX aside) Same story - choose your LPs wisely and expect Liquidity to be fickle.
Infrastructure: This class remains a strong portfolio diversifier and inflation hedge. Stay overweight.
Gold: We currently trading at the bottom of the trading range. Higher US interest rates have been a headwind, good buying under US$4,000.
Government Bonds: The question today is whether growth will weaken faster than inflation falls. The mainstream institutional view is to be moderately long duration versus cash, but with a preference for short-to-intermediate maturities rather than making a big bet on 30-year Treasuries. Therefore – we are neutral on long dated bonds but overweight short to intermediate bonds (out to 10 years). We expect the Warsh trade to play out this way. We have lesser conviction on Australian bonds and see local inflation to remain “sticky”. Stay short.
Private Credit: Australian PC is favoured over US with minimal local SaaS credit exposure, lower leverage, better security positions, better spreads, tighter ASIC oversight and favourable default rates.
Cash: Overweight. Ditto to last quarter - Cash gives us “optionality” for deployment in volatile markets and returning 4%+, we are not being unduly penalised for being patient. In the US, allocate to short date bonds.
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