28 August 2026
This month, we caught up with the Investment Team at AustralianSuper to discuss what’s driving investment markets.
Investment markets were dominated by two key themes during the year: artificial intelligence and geopolitics. Investment returns were largely determined by the amount of exposure to each of these themes.
In a lot of ways, it was a continuation of the equity story, with international equities providing the strongest returns across our asset classes. AI continued to drive markets – with billions of dollars of investment driving growth and earnings.
But importantly, as the AI cycle matures, we’ve seen it benefit a wider set of investments, broadening beyond US tech stocks, into different regions and different asset classes. From a regional perspective, we saw emerging markets outperform US stocks; from an asset class perspective, we saw solid performance contributions from our private credit and private equity portfolios.
Markets were tested by geopolitical uncertainty and shifting expectations for the global supply chain and the impacts on inflation. But it was a good reminder that volatility is a normal part of investing. And ultimately, our MySuper Balanced option delivered strong returns for members over the financial year to 30 June 2026.1
For long-term investors like us, periods of volatility can create opportunities when assets become temporarily mispriced. As an active manager, we navigate these environments opportunistically. And because different asset classes, sectors and regions respond differently to global events, diversification can help reduce the impact of any single shock. This becomes particularly valuable when geopolitical and economic conditions are changing rapidly, as we’ve seen this year.
Many investors view the potential for higher inflation and stretched valuations as the biggest risks to the market. Rising costs of living and higher interest rates could weigh on consumer spending and the housing market. As a result, growth could moderate in the near term, as these higher costs flow through to households and businesses.
There’s also quite a bit of uncertainty around the US-Iran conflict. So, markets may remain volatile in the near term as the situation continues to evolve.
While these factors will likely drive conditions in the months ahead, the medium-term outlook is constructive. AI is expected to deliver meaningful productivity gains over the coming years. Additionally, continued public and private investment – for example, in infrastructure, defence and the energy transition – should provide a foundation for sustained growth.
Sponsored by AustralianSuper Pty Ltd, ABN 94 006 457 987, AFSL 233788, Trustee of AustralianSuper ABN 65 714 394 898.
This information may be general financial advice which doesn’t take into account your personal objectives, financial situation or needs. Before making a decision about AustralianSuper, you should think about your financial requirements and refer to the relevant Product Disclosure Statement available at australiansuper.com/PDS or by calling 1300 300 273. A Target Market Determination (TMD) is a document that outlines the target market a product has been designed for. Find the TMDs at australiansuper.com/TMD.
