Investor Update - February 2026

The ASX 200 rose +4.1% in February, supported by a strong earnings reporting season for banks and resource companies. BHP Group (+15.5%) and Commonwealth Bank (+18.5%) delivered results well ahead of expectations.

Both portfolios are overweight Materials and Energy, while remaining underweight Financials. The Blended portfolio rose +2.8%, while the Income portfolio increased +4.8%, aided by its position in CBA.

This was the second-strongest reporting season for earnings upgrades in 25 years, with consensus FY26 expectations revised upward by approximately 2%. The market now expects earnings growth of more than 10% for FY26, primarily driven by higher commodity prices and capital discipline across the resources sector.

CSL disappointed with its 1H26 result. While we reduced the portfolio weight below its ASX benchmark over the past nine months, the stock has nevertheless detracted from performance.

Following the recent management session, our view was more constructive than expected. The interim CEO appears pragmatic and highly experienced, and management indicated second-half trading conditions are improving, with stronger volume trends in immunoglobulin and albumin alongside tighter cost discipline. Expectations for earnings have now been materially reset lower, and early signs of operational stabilisation provide a more balanced risk-reward profile than in recent months.

The portfolios remain positioned toward companies with strong balance sheets, industry leadership and exposure to structural growth themes. We maintain an overweight to resources, reflecting improving earnings momentum, and retain meaningful positions in major Australian banks. Technology exposure remains minimal, reflecting elevated valuations and a preference for tangible assets and stronger near-term cash flows.