Australian Shares Fund

The Australian Shares Fund (Fund) delivered a strong September quarter, returning 2.7% and outperforming the benchmark return of 0.8%. Performance was driven predominantly by stock selection, with strong contributions from the Health Care, Financials and Industrials sectors. Encouragingly, excess returns were generated across a broad range of holdings, highlighting the effectiveness of the Fund's disciplined investment process and focus on identifying quality businesses with sustainable competitive advantages, strong management teams and attractive long-term growth prospects.

Market performance during the quarter continued to be shaped by global macroeconomic and geopolitical developments. Rising oil prices and ongoing geopolitical uncertainty contributed to inflationary pressures, leading several central banks to keep rates elevated. Higher interest rates continued to weigh on consumer confidence and economic activity, while the Australian reporting season highlighted a generally cautious corporate outlook. Although most FY26 results were broadly in line with expectations, management commentary reflected a subdued outlook for growth, with concerns around consumer spending, credit growth and the broader economic backdrop remaining prevalent.

The Health Care sector was the strongest performing sector in the benchmark and the Fund’s overweight position in this sector was a key contributor to relative outperformance. CSL performed strongly following a series of operational initiatives implemented by the interim CEO to address areas of underperformance and improve execution. The market was too pessimistic on the company's earnings outlook, underestimating its plasma franchise and ability to grow earnings sustainably. A permanent CEO appointment could be the catalyst for further investor interest.

Cogstate was also among the Fund's largest contributors following continued momentum in demand for its cognitive assessment technologies, which support pharmaceutical companies developing therapies aimed at improving neurological health and healthy ageing outcomes. Meanwhile, payments and banking infrastructure provider Cuscal also contributed positively. The Fund was a cornerstone investor in its IPO, reflecting our confidence in management, the company's strategic position within Australia's payments ecosystem and its attractive growth prospects.

Corporate activity emerged as a defining theme within the Industrials sector during the quarter and was another meaningful contributor to performance. Reliance Worldwide and Cleanaway both received takeover approaches, while other holdings in the Financials sector, including Steadfast, OFX and EQT Holdings were also linked to corporate activity. The level of strategic interest reinforces our view that quality industrials continue to trade below their intrinsic value after a difficult year. Many of these businesses exemplify the characteristics we seek in our investment process, including strong market positions, resilient earnings and attractive long-term growth prospects.

While the Fund delivered strong relative performance overall, our underweight allocations to the Materials and Energy sectors remained a partial offsetting headwind, detracting approximately 2% relative to the benchmark. Both sectors remained among the strongest areas of the market. Together, these sectors account for more than 30% of the benchmark Commodity markets were generally supportive during the quarter, with strength in gold, copper and energy commodities reflecting ongoing geopolitical tensions and structural demand linked to electrification and AI infrastructure investment. In contrast, steelmaking commodities were softer, while lithium prices remained under pressure.

Our underweight to these sectors is shaped by our Ethical Charter, which directs capital towards companies contributing to a more sustainable economy andstructural growth opportunities associated with the transition to a lower-carbon future.

Returns within Information Technology were also a headwind for the Fund, as a number of software companies faced ongoing market concerns around AI-related disruption, and long-duration assets continued to sell off with the rising interest rate environment. Among the detractors, PEXA underperformed following uncertainty associated with the Independent Pricing and Regulatory Tribunal (IPART) review process. While regulatory reviews can create periods of uncertainty, we continue to view PEXA as a high-quality digital infrastructure asset with a strong market position, significant network advantages and valuable long-term optionality through its UK operations.

While market leadership continues to be influenced by macroeconomic events and commodity-related sectors, the September quarter highlighted the benefits of maintaining a disciplined focus on business quality, management capability and long-term fundamentals. We remain confident that the portfolio is well positioned to deliver attractive long-term returns through active stock selection while remaining aligned with our Ethical Charter and investment philosophy.

Australian Shares (Wholesale) Fund Performance

As at 30 September 2026^*

^Benchmark is 65% ASX 100 / 35% ASX Small Ordinaries. Past performance is not a reliable indicator of future performance.

Inception date: 23/01/2012.

Australian Shares (Retail) Fund Performance

As at 30 September 2026^*

Contributors

• CSL (CSL) outperformed strongly over the quarter, as investor confidence continued to build around the company's improving outlook and the recovery in its core plasma franchise. The growth outlook has re-emerged in the plasma business, which remains the key driver of long-term value, while management's focus on operational execution, cost efficiencies and performance improvement is beginning to gain traction across the group. The market responded positively to signs of stabilisation under the interim CEO and increasing confidence that earnings momentum is strengthening. We believe CSL remains well positioned to deliver attractive earnings growth, supported by its leading global market position and the enduring structural growth in plasma demand. 

• Nuix (NXL) was a strong contributor during the quarter following its announced FY26 result, which demonstrated continued progress across the business. The company delivered double-digit annual contract revenue growth, strong cash EBITDA generation and FY27 guidance ahead of market expectations. Growth was supported by ongoing adoption of the Nuix Neo platform, with customer migrations contributing to higher contract values and an improving revenue mix. Management also continues to invest in AI capabilities and platform development, supporting the company's long-term positioning. We remain positive on Nuix's role in investigative analytics and data governance, with further Neo adoption and pipeline conversion expected to underpin growth over time. The strong balance sheet should enable value enhancing acquisitions or capital management initiatives. 

• Graincorp (GNC) performed strongly over the quarter on an improved FY27 earnings outlook as ABARES increased its East Coast winter crop forecasts by 12% to 26.6mt, well above the 10-year average. Disruption to Black Sea grain supply also pushed global wheat prices sharply higher, which should improve export margins. GrainCorp stands to benefit if it can increase volumes through its network if export margins remain elevated. Some of the share price gains were given back late in September, when a trading update flagged a six-month delay and about $30m extra cost for its system upgrade, although FY26 guidance was reaffirmed. Looking forward, a normalising margin environment for both the agribusiness and the nutrition and energy business will support the forecast earnings outlook.

Detractors

• PEXA (PXA) underperformed over the quarter, with the share price coming under pressure as uncertainty around the future pricing framework for the Australian exchange business weighed on investor sentiment. While the FY27 outlook factors in softer Australian property transfer volumes, investor concern is primarily driven by uncertainty around the final outcome of the IPART pricing review and its potential implications for the Australian exchange business. Despite this regulatory overhang, the core exchange platform remains a critical part of the property settlement ecosystem. We continue to see value in the business beyond the current regulatory overhang, with the UK operation providing a source of longer-term growth that we believe is not reflected in the current share price. 

• SiteMinder (SDR) detracted over the quarter, with the share price coming under pressure following its FY26 result as investors reassessed the company's medium-term growth outlook, while concerns around the potential impact of AI developments on the travel technology sector also weighed on sentiment. The result included a reduction in annual recurring revenue growth expectations from the previous 30% target to growth ‘in the 20s’ for FY27. Despite this, underlying operating metrics remained sound, including stable churn and strong customer economics. We continue to see value in the business beyond the current uncertainty, with ongoing adoption of Smart Platform products expected to support future growth over time. 

• Xero (XRO) underperformed over the quarter, as renewed concerns around AI-driven disruption and a US competitor downgrade weighed on sentiment. While these concerns impacted the share price, we continue to see evidence of a durable competitive advantage through Xero's strong customer retention, ecosystem expansion and attractive positioning within the small business software market. With the stock trading at historical low multiples, we remain constructive on Xero's long-term positioning, supported by its competitive advantages and significant growth opportunity in the US market.  

CSL performed strongly following a series of operational initiatives implemented by the interim CEO to address areas of underperformance and improve execution

Portfolio changes

Additions to the Fund

• AMP Limited (AMP) – We added AMP as we believed the valuation did not reflect the value of its China asset management exposure or the growing momentum of the North platform, which is increasingly being recognised by advisers as a compelling lower-cost alternative.

• Aroa Biosurgery (ARX) – We initiated a position as we are attracted to its strong growth profile, high gross margins and significant upside potential as Myriad adoption continues to scale and reimbursement tailwinds support further penetration.

• FDC Consolidated Holdings Ltd. (FDC) – We initiated a position in FDC through its IPO, attracted by the valuation and the opportunity to own a high-quality construction business with a growing national footprint.

• Reece Limited (REH) – We added Reece as we believed the valuation did not reflect the earnings recovery opportunity, supported by a cyclical improvement in ANZ and a long runway for growth in the US. 

• Sims Ltd. (SGM) – We added Sims following share price weakness, viewing the valuation as an attractive entry point into a global recycling business with growing exposure to higher-value e-waste and data-centre recycling opportunities.

• Telix Pharmaceuticals Limited (TLX) – We initiated a position in TLX as we are attracted to its established diagnostics business, which provides funding for a growing pipeline of radiopharmaceutical assets, creating the potential for sustained earnings growth over the long term.

• Wesfarmers Limited (WES) – We initiated a position in WES as we are attracted to its high-quality retail portfolio, balance sheet strength and proven capital allocation capability provide a solid foundation for sustainable earnings growth and shareholder returns.

Divestments from the Fund

• Alterity Therapeutics Ltd. (ATH) – We exited Alterity during the quarter, preferring to allocate capital to opportunities with nearer-term catalysts, while acknowledging the company's longer-term potential remains intact.
  
  

• Dexus (DXS) – We exited Dexus during the quarter as we continue to see risks around negative news flow for the funds management business.
   
• Hansen Technologies Limited (HSN) – We sold Hansen after its FY26 result highlighted a weaker growth outlook and increased investment spending, which reduced confidence in the medium-term earnings trajectory. 
   
• ImpediMed Limited (IPD) – While we continue to see long-term potential in ImpediMed, we divested the position as we see risks to execution of growth in the near term.  
   
• Medibank Private Ltd. (MPL) – We divested Medibank during the quarter as the shares increasingly reflected our expectations for earnings growth and operating performance.
   
• Qube Holdings Ltd. (QUB) – We exited Qube following completion of the takeover by the Macquarie-led consortium, crystallising strong returns and redeploying capital into opportunities with greater upside potential
   
• Rubicon Water Limited (RWL) – We exited Rubicon Water as ongoing delays to US irrigation funding continued to defer contract conversion, increasing earnings and balance sheet risk and reducing confidence in the investment timeline
   
• Woolworths Group Ltd (WOW) – The Fund exited WOW on valuation grounds, with the stock trading on elevated price earnings multiples following evidence of regaining market share. 
   

Cogstate was among the Fund's largest contributors following continued momentum in demand for its cognitive assessment technologies, which support pharmaceutical companies developing therapies aimed at improving neurological health and healthy ageing outcomes.

The Health Care sector was the strongest performing sector in the benchmark and the Fund’s overweight position in this sector was a key contributor to relative outperformance.

Sector allocation

Sector overweights
Communication Services, Financials, Health Care, Information Technology, Utilities

Sector underweights
Consumer Discretionary, Consumer Staples, Energy, Industrials, Materials, Real Estate