Following consecutive years of solid returns, four themes are influencing investment strategy as markets move into a more measured phase.
Recent weeks have seen heightened volatility across global investment markets, driven by shifting economic data, central bank policy expectations, geopolitical uncertainty, and rapid disruption associated with advances in artificial intelligence. While short-term market movements can be unsettling, periods of change, including technology-driven transformation, have historically created both challenges and opportunities, reinforcing the importance of maintaining a disciplined, long-term investment strategy.
One of the most consistent findings in investment research is that investor behaviour, not market performance, is one of the biggest drags on returns. When markets are rising, excitement and fear of missing out can tempt investors to buy at elevated prices. When markets fall, panic often leads to selling at the worst possible moment. This pattern of buying high and selling low is the single most destructive habit in investing.
Studies from DALBAR1 and Morningstar2 consistently show that the average investor underperforms the broader market by several percentage points each year, largely due to poor timing decisions driven by emotion rather than strategy. Professional investors, by contrast, tend to buy during periods of widespread fear and sell into periods of exuberance — the counter-intuitive discipline that compounds wealth over decades.
What this means for you: This is precisely why we maintain a disciplined, long-term investment strategy on your behalf. Our role is to remove emotion from the equation and ensure your portfolio stays aligned with your goals, especially during the periods when markets feel most uncomfortable. Staying invested through volatility, rather than reacting to it, is one of the most powerful things we can do for your wealth.
A striking trend in recent months is the disconnect between company quality and share price performance. On the ASX, lower-quality and loss-making companies have dramatically outperformed, while many high-quality, profitable businesses have seen their share prices fall. Quality companies are those that are highly profitable, have strong balance sheets and low financial leverage.
The table below illustrates the scale of this divergence:
In simple terms, the worst-quality businesses on the market have returned over +40% relative to the ASX 300 Index in just six months, while the highest-quality growth and compounding businesses have lost around –20%. This represents an extraordinary 60+ percentage point spread between loss makers and quality stocks. This kind of environment is unusual and historically doesn’t persist. Over the medium to long term, quality and profitability tend to be rewarded.
What this means for you: We continue to favour well-managed, profitable companies in your portfolio. While short-term market trends can reward speculative and loss-making names, our focus on quality is designed to protect and grow your wealth over the full market cycle. Periods like this can feel frustrating, but they are often followed by a reversion to fundamentals that rewards patient, quality-focused investors.
Artificial intelligence has moved from a background technology story to a major driver of day-to-day market volatility. Two competing concerns are unsettling investors:
Disruption fear: Investors worry that AI could rapidly displace entire industries. This has triggered rolling sell-offs across sectors including software, transportation, wealth management, insurance, and commercial real estate. Corporate mentions of AI disruption nearly doubled during the most recent earnings season, reflecting how central this theme has become to business outlooks.
Spending doubts: At the same time, a record 35% of global fund managers believe companies are spending too much on AI — the highest reading in the history of the BofA survey3. AI-related capital expenditure is projected to grow 53% over the next twelve months, and cash flow is turning negative for some of the largest technology companies. A quarter of surveyed investors now see an “AI bubble” as the single biggest risk to markets.
Despite the noise, the consensus view among leading strategists at JPMorgan, Morgan Stanley and others is that AI will ultimately make the economy larger and more productive. The current market volatility reflects the market sorting winners from losers, a natural and healthy process that creates prime conditions for active, disciplined managers.
What this means for you: We are monitoring AI-related developments closely and positioning portfolios to benefit from the long-term productivity gains while managing the short-term risks. Not every company spending on AI will succeed without risks, and selectivity matters, which is exactly the kind of environment where active management adds the most value.
Emotional behaviour, quality factor rotations, and AI turbulence, are exactly the kind of short-term noise that can derail investors who lack a structured framework. This is why we build your portfolio around a Strategic Asset Allocation (SAA), a disciplined, evidence-based approach that determines the right mix of equities, bonds, real assets, and alternatives based on your goals, risk tolerance, and time horizon.
Our approach aims to: Protect capital, Preserve real value, and Grow wealth — underpinned by strategic asset allocation
Key insight: Picking the best asset class every year is almost impossible. A systematic SAA approach focuses on more reliable longer-term market trends and minimises behavioural bias.
Source: Findex Investment Team
SAA isn’t guesswork, it’s a structured process that uses expected return, risk (volatility), and correlation assumptions to build a portfolio that has the best chance of meeting your objectives through a full market cycle. Research consistently shows that SAA explains approximately 90% of a portfolio’s return variability over time. In other words, it is the overall structure of your portfolio, not trying to pick the winning asset class each year, that drives your long-term results.
Our investment philosophy is built on three pillars. We aim to:
Protect your capital by avoiding the common traps that destroy wealth: panic selling in downturns, chasing performance in booms, excessive complexity, and hidden fees.
Preserve real value through thoughtful asset allocation, portfolio construction, and ongoing management that keeps your portfolio aligned with your risk profile.
Grow your wealth by investing in high-grade assets assessed on a rigorous risk-versus-return basis.
This philosophy means your portfolio is designed to perform through full market cycles, not just the good times. Our disciplined focus on SAA gives us a clear portfolio anchor and ensures every decision is repeatable and accountable, rather than reactive. Picking the best-performing asset class each year is almost impossible; a systematic SAA approach focuses on reliable longer-term trends and minimises the behavioural bias we discussed in Section 1.
If you would like to discuss how your investment portfolio is positioned, or have any questions, please don’t hesitate to reach out to us.
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