The strategies that won and lost the FY26 race.

On paper, FY26 was a good year for Australian fund managers. Across the FundMonitors.com database of more than 1,000 wholesale funds, about 81 per cent finished the year positive, a typical multi-sector balanced portfolio returned around 9 per cent, and every category of fixed income delivered a positive result. Look through the headline numbers, though, and the market most investors think they lived through is not quite the market that actually happened.

The number that decided the year

Start with the largest single fact of the year. The average fund in the long-only Australian large-cap equity category returned 2.69 per cent. The equivalent global large-cap category averaged 12.38 per cent. A gap of more than nine percentage points made where you invested, not which manager you picked, the most consequential decision an Australian investor faced this year.

The hidden lever was currency

The real story sits underneath the individual assets, in the exchange-rate risk investors were carrying. A strengthening Australian dollar ate into every unhedged offshore holding. The clearest illustration in the data comes from listed infrastructure, where one hedged Australian feeder fund returned 25.58 per cent against 16.83 per cent for its unhedged twin, holding the same underlying portfolio. That roughly nine per cent, generated purely by currency, is why the hedging decision mattered as much as manager selection this year.

This year's winners had already turned

The other feature worth pausing on is the makeup of the winners. Nearly every top-performing equity fund in the country carried concentrated gold, natural resources or high-conviction long and short positioning, and many then finished the year well below their own peaks. Gold reached about US$5,598 an ounce in late January and traded near US$4,400 by 30 June, a fall of roughly 25 per cent. An investor reading these league tables in July is looking at a theme that had already turned by the end of June.

Income quietly did its job

Away from the headlines, fixed income did exactly what it was built to do. Every category of bond fund finished the year positive, and corporate-bond strategies earned two to three times what duration-heavy sovereign mandates delivered. Carry paid bond investors as the Reserve Bank lifted the cash rate to 4.35 per cent, while portfolios positioned for aggressive rate cuts were left behind. In property and private markets the split was just as wide: Australian real estate debt funds averaged about 9.6 per cent with every fund positive, even as the broader global property basket fell 2.81 per cent.

The asset class now on notice

The same measurement question is being asked publicly of last year's most heavily promoted asset class. Private credit and real estate debt again delivered smooth, high single-digit returns with little reported volatility. Less than two weeks before financial year end, ASIC formally put the sector on notice, warning that 30 June valuations must be current, accurate and grounded in realistic assumptions, and describing it as the sector's first real test. That is the right frame for reading this year's private credit numbers. The returns are real, but so is the scrutiny.

The payoff is geopolitical. You do not need a view on every flashpoint, but you do need to understand the risks you are holding.

— Bill Moss AO, Founder and Chairman, Boston Global Wealth

The finding that matters most

Strip it all back and this is the point. This year's league tables rewarded a single theme, then began taking the reward back in the final quarter. The durable information sits one layer down, in the funds that hold competitive rankings across one, three, five and seven years and through more than one market environment.

Two kinds of consistency show up on that longer view. One is aggressive, delivered by concentration or gearing that amplifies whatever the market happens to be paying for at the time, and it carries a matching failure mode when the environment turns. The other is quieter, built in credit and income strategies that compound from many repeated underwriting decisions rather than one thematic bet. The second kind is stronger evidence of process, with the standing caveat that private valuations smooth the path, and that regulators are now watching those valuations more closely than they have before.

How we think about it at BGW

For most investors, return is only half the picture. How an investment is structured and taxed can matter as much as the headline number it delivers, and it is a theme we expect to return to in the issues ahead. If you want to understand how consistent the funds you actually own have been across cycles, not just in the year that happened to suit them, that is the kind of work the BGW Investment Committee does, across listed and private markets and sized to each client's portfolio and wholesale eligibility. It is a conversation, not a product. You can also see where the Australian market sits today on our live Australia Market Valuation dashboard.