Fin-X Wealth Global Horizons MDA March 2026 performance report

Portfolio Performance

The Fin-X Wealth Horizons Managed Portfolio returned -9.94% for the March quarter, underperforming its benchmark by 3.71%. Over shorter timeframes, performance has been challenging, with the portfolio also lagging over six months and since inception. Over the past year, however, the portfolio has delivered a 9.13% return, modestly outperforming the benchmark.

The quarter was characterised by increased market volatility and a broad-based decline in risk assets, following a period of highly concentrated market leadership. As investor sentiment shifted and valuation sensitivity increased, weakness extended beyond the narrow group of mega-cap companies that had previously supported index performance.

Performance was impacted by the portfolio’s exposure to growth-oriented and higher-conviction positions, which experienced greater volatility as markets adjusted to a more uncertain outlook for interest rates, inflation, and global growth. While this positioning detracted over the short term, it reflects the portfolio’s objective of capturing longer-term capital growth opportunities. The ongoing energy price shock—driven by the Iran-Israel conflict and the closure of the Strait of Hormuz—has reinforced the Committee’s view that inflation risks remain skewed to the upside.

In the United States, equity markets became increasingly sensitive to changes in interest rate expectations and earnings outlooks, contributing to greater dispersion across sectors. In Australia, persistent inflation, higher interest rates, and slowing domestic demand continued to weigh on broader market performance, with only partial support from commodity-linked sectors.

Looking ahead, markets remain influenced by uncertainty around the path of inflation, the timing and uncertainty around monetary policy changes, and the sustainability of earnings growth. These conditions are likely to contribute to continued volatility, particularly for growth-oriented and longer-duration assets.

Consistent with the Fin-X investment philosophy, we remain focused on disciplined portfolio construction, high-conviction investments aligned with long-term structural trends, and rigorous risk management. While recent performance has been impacted by shifting market dynamics, we believe the portfolio remains well positioned to benefit as market conditions stabilise and long-term opportunities reassert themselves.

Portfolio Changes

Market Summary & Portfolio Positioning

Market Outlook

Although the economic outlook is sober, the earnings picture is less negative. AI investment is spreading beyond the major hyperscalers to a broader set of technology beneficiaries, predominantly in the US, and global earnings estimates have been supported by the sheer scale of that investment. Earnings multiples compressed as profits grew but re-expanded in early April and remain close to recent highs, as investors "bought the dip" with a bias towards technology names.

In Australia, the banks appear expensive relative to both their own history and international peers: the S&P/ASX 200 bank sector's dividend yield — including imputation credits — now sits below the RBA cash rate. The broader Australian market, however, trades closer to its long-term averages.

Concentration in higher-growth areas may reflect enthusiasm for a particular theme, though it could equally signal risk aversion and concern about the broader economic outlook. Either way, high valuations warrant caution: share prices remain vulnerable to higher rates and any earnings disappointment, and there is a strong case for greater discrimination in stock selection. So far, however, investors are not rotating out of equities into safe-haven assets.

Government bond yields rose in response to hawkish central bank guidance, though by less than the inflation and fiscal outlook might have implied. That investors appear to retain confidence in the inflation-fighting credibility of central banks is an important stabilising factor — and perhaps the most consequential variable to monitor in the quarters ahead.

Market Performance

After delivering strong returns in 2025, investment returns were weaker in the first quarter of 2026 as several headwinds emerged.

Geopolitics dominated financial headlines. Fractures appeared in the western alliance at Davos, where President Trump made territorial claims over Greenland. More dramatically, joint US-Israeli strikes on Iran at the end of February sent oil prices sharply higher, sparking fears of higher inflation and a possible growth shock.

Concurrently, a sharp repricing of software equities — dubbed the "SaaSpocalypse" — reflected growing concern that autonomous AI agents threaten the traditional software-as-a-service business model, prompting an abrupt reassessment of future cash flows across the sector.

American private credit funds, partly due to their exposure to software, saw large withdrawal requests, raising concerns of a solvency crisis in higher-risk lending. Higher-quality corporate bond spreads widened only modestly, and bank shares remained broadly supported by expectations of higher trading revenues and interest rates.

Equity markets reached their quarterly lows at end-March. Australian small caps fell -10.9%, while global small caps (-1.8%) and emerging markets (-2.8%) outperformed large-cap developed market peers (-6.2%).

Hedge funds offered better protection than international equity indices, though were hurt by the high US dollar exposure of the index as the Australian dollar rose. Gold retraced some of its recent gains but still finished the quarter +4.5% higher in Australian dollar terms.

The Australian dollar rallied as the RBA raised rates by +0.25% in February and March. Higher rates also weighed on Australian property trusts. Global infrastructure was a relative bright spot, benefiting from a positive earnings outlook as the conflict in the Persian Gulf reinforced the shift towards a more electrified economy.

Global Economy

At end-March, the war in the Middle East continued to dominate headlines. Iran found leverage through its ability to threaten the Strait of Hormuz: even without the naval power to enforce a full blockade, the threat to individual vessels was sufficient to void insurance contracts and dissuade shipping lines from attempting passage. Market volatility remained elevated, reacting sharply to announcements and social media posts from both sides of the conflict.

Early inflation readings point to a higher impulse from energy costs, though US housing has provided some offset, leaving the inflationary impact less severe than initially feared. Higher diesel costs and reduced natural gas exports from the Gulf are likely to weigh on supplies of intermediate goods such as fertilisers and helium in the months ahead, and some inflationary pressure has yet to work its way through the system.

The impact on economic growth is harder to gauge, not least because the timeline to resolution remains unclear. Household budgets are relatively tight as the challenge shifts from the rate of current inflation to the cumulative cost-of-living increases since the pandemic. The University of Michigan consumer confidence survey — the most sensitive to inflation among major American consumer surveys — recently hit an all-time low.

In Australia, the government halved fuel excise duties until end-June, suspended heavy vehicle road user charges, and took additional measures to avoid a supply crisis. Nonetheless, higher energy costs are likely to feed through into travel, food and goods prices in the months ahead.

Central banks responded with a hawkish pivot. Having spent considerable time extolling the importance of defeating inflation following the pandemic, policymakers were not prepared to abandon their commitment to price stability. For most, this meant simply delaying the rate cuts that had previously been priced in. The RBA went further, judging that the economy was experiencing excess demand relative to potential supply — a capacity deficit already generating inflationary pressure before the conflict began. Its February quarterly forecast projected inflation peaking at around 4.2% in mid-2026, well above the 2%–3% target. Rate rises in February and March brought the overnight cash rate to 4.1%, just -0.25% below its post-pandemic peak, and market pricing implies a further two quarter-point rises later this year.

Having been praised for avoiding over-tightening in 2023 and 2024, the RBA's hawkish pivot caught many off guard. The NAB Business Survey showed confidence falling to -29, a reading only surpassed to the downside in the immediate aftermath of the Lehman Brothers collapse in 2008 and the early stages of the pandemic.

Despite the administration’s continued support for tariffs, there is little evidence that they are delivering the intended outcomes. Manufacturing activity remains in contraction, according to the monthly ISM survey. Meanwhile, China’s trade surplus rose by +7.0% in 2025, even as exports to the US declined. Canada, the EU and other economies have continued to expand bilateral trade agreements, contributing to downward pressure on the US dollar. 

May's federal budget will require a difficult balance. Higher public expenditure helped cushion the private sector slowdown in 2023 and 2024 but likely contributed to the inflationary pressures entering 2026. Potential capital gains tax reform and changes to the NDIS signal a tighter fiscal outlook ahead.

The US fiscal picture is materially different. On the negative side, new tariffs, a downsizing of the public sector, and the resumption of student loan payments all weighed on 2025 activity. In terms of stimulus, provisions of the "One Big Beautiful Bill Act" came into effect at the start of the year, including significant capital expenditure tax breaks to support re-shoring of manufacturing and an end to the taxation of tips. The principal benefits accrued to businesses, while higher healthcare and energy costs maintained pressure on households and consumer spending.

Historically, oil shocks and the tighter monetary policy that follows have tended to lead recessions. However, the elevated level of corporate investment is likely to prevent negative US GDP prints, even if growth adjusts to a lower trajectory. In April, the IMF trimmed its 2026 growth forecasts for both the US and the global economy, noting that risks were skewed to the downside.

Disclaimer

The contents of this communication are prepared by Brerona Capital Asset Management Pty Ltd (A.C.N. 627 650 293; AFSL 520526 trading as Fin-X Wealth). Any advice contained in this communication is general advice and does not take into consideration your personal objectives, goals, needs and financial situation. You should therefore not rely on the information contained in this email to make any investment decisions without first consulting an investment professional such as your financial adviser. Where there is any reference to specific products, you should obtain the relevant Product Disclosure Statement(s) and familiarise yourself prior to making a financial decision. The authors have relied on external data sources and as such do not guarantee the accuracy of the information, as such you should independently verify all data yourself. Any unauthorised use of this communication is prohibited. This email (including any attachments) is intended only for general information purposes. You must not copy, reproduce, disseminate, or use this document and its contents without seeking prior approval from Fin-X Wealth. We track our performance based on trade date +1 day, and we make the assumption that trades were placed at this time, this may not always be the case. This may result in timing differences for trades placed through our custodian not perfectly reflecting the reporting function which reports the end of day price. Actual performance you experience may not truly reflect the results outlined in the table due to timing differences, commission differences etc. Please take these performance numbers as indicative only.