Meeting Date: 18 & 21 september 2026
“NAVIGATING HIGHER YIELDS: RESILIENCE, IMPLEMENTATION AND GOVERNANCE”
We are pleased to share a high-level summary of our September Investment Committee Meeting. It was held across two sessions to cover the bond market and inflation outlook, asset allocation, private markets, portfolio implementation and governance priorities.
Global bond markets continue to adjust to higher government debt levels and changing inflation expectations. Against this backdrop, the Committee focused on keeping portfolios resilient, reviewing how investment strategies are implemented and strengthening investment oversight.
Key Discussion Highlights
1. Bond Markets, Government Debt and the Inflation Outlook
The Committee reviewed a detailed analysis of global bond markets, with a particular focus on US Treasury yields and what they mean for portfolio allocation.
Key observations included:
- US Treasury yields reflect inflation expectations, growth projections and confidence in the US government’s ability to service its debt. Term premium risk is an increasingly important consideration.
- Rising interest costs on government debt are influencing asset pricing globally.
- US nominal economic growth continues to exceed the cost of servicing its debt, which has historically been a supportive indicator.
- The US dollar’s role as the world’s reserve currency is expected to change only gradually, despite efforts by some nations to reduce reliance on it.
- Policy responses to high debt levels may help prevent a major bond market disruption, but could keep inflation elevated for longer.
- Australia’s government debt remains lower relative to the size of its economy than in many developed countries, although private debt levels are broadly comparable.
2. Asset Allocation and Inflation Protection
The Committee considered how portfolios can remain resilient if inflation stays higher for longer.
The discussion covered:
- Continued confidence in equities, supported by a robust corporate earnings cycle, while monitoring the potential effects of higher bond yields.
- Agreement to consider increasing allocations to hard assets, such as commodities and infrastructure, to help protect against inflation.
- The role of infrastructure as a long-term wealth-protection asset, accessed through the Committee’s approved infrastructure managers.
- A cautious view on the Australian economy, with expectations of below-trend growth and a rising probability of recession.
- Maintaining an underweight position in private credit.
3. Private Markets and Private Credit
The Committee continued its assessment of how private markets may complement existing portfolio strategies, in response to growing client interest in assets with lower correlation to traditional markets.
Areas of focus included:
- Evaluating three ways to access private markets: evergreen funds, specialist platform providers and direct institutional investment.
- Agreement in principle to pursue a hybrid approach. This would combine a select number of evergreen funds, for investors who need greater liquidity, with a select number of platform providers.
- Balancing client demand for private assets against the importance of investing only in strategies that are well understood.
- Exercising caution in private credit amid ongoing industry consolidation, with a focus on larger, well-established managers.
- Applying full due diligence to private credit managers, covering people, process, pricing, performance and operational quality.
The Committee will continue its work on resourcing and implementation before finalising its private markets approach.
4. High Conviction List and Portfolio Implementation
The Committee reviewed the High Conviction List and considered how model portfolios can be implemented more efficiently for clients.
Key outcomes included:
- Approving refinements to the High Conviction List, including the addition of new strategies and the removal of others.
- Reviewing selected private credit managers to ensure they continue to meet the Committee’s standards.
- Exploring the use of managed accounts to implement model portfolios, potentially providing broader access to investment managers, more competitive fee structures and more efficient implementation.
- Considering the benefits of portfolio structures where clients hold investments directly in their own names, including transparency and potential tax efficiency.
- Prioritising the selection of the best manager for each portfolio segment, with managers already on the High Conviction List being considered first.
5. Investment Governance, Reporting and Technology
The Committee continued to progress initiatives that strengthen governance, reporting and operational efficiency.
Priorities included:
- Enhancing portfolio construction and performance reporting across model portfolios.
- Developing a formal Investment Governance Statement that documents the firm’s investment process and oversight framework.
- Progressing the firm-wide rollout of secure, enterprise-grade AI tools to support research, reporting and compliance monitoring, while maintaining strong data security and human oversight.
- Making the Committee’s economic and market research more accessible and easier for clients to digest.
Looking Ahead
The Investment Committee will focus on implementing the agreed High Conviction List refinements, progressing its managed account review and finalising its approach to private markets.
Further work will include enhancing performance reporting, completing the Investment Governance Statement and continuing the secure integration of AI tools across the business.
As the outlook for inflation and interest rates evolves, the Committee will continue to assess portfolio resilience while maintaining a disciplined focus on quality, diversification, risk management and long-term client outcomes.
Our Commitment
Our Investment Committee meets regularly to review markets, assess investment managers and refine portfolio strategy. We remain committed to disciplined decision-making, rigorous governance and delivering long-term outcomes for our clients.
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