Diversified Shares Fund
Global and Australian equity markets delivered strong returns in the September quarter, buoyed by easing monetary policy and resilient corporate earnings. The MSCI World Ex Australia Index rose 6.1%, outperforming the S&P/ASX 300 Index, which gained 5.0%. The Diversified Shares Fund (Wholesale) (the “Fund”) returned 2.9% for the September quarter, net of fees. The Diversified Shares Fund (Retail) returned 2.8% net of fees for the September quarter.
The standout theme was the Federal Reserve’s first rate cut of 2025, reducing the policy rate to 4.00–4.25%. This dovish pivot helped sustain investor optimism, even as US consumer confidence softened and inflation remained above target. In contrast, the Reserve Bank of Australia held rates steady at 3.60%, citing hotter-than-expected CPI data and a cautious outlook for domestic growth.
From a sector perspective, global technology stocks continued to lead, with the Nasdaq 100 posting its best September since 2010. The “Magnificent 7” contributed nearly two-thirds of the S&P 500’s gains, underscoring the market’s concentration risk. AI-related themes remained dominant, with chipmakers and cloud infrastructure providers benefiting from strong demand and investor enthusiasm.
Australian equities saw a divergence in performance. While the broader ASX 200 fell 0.8% in September, the Small Ordinaries Index rallied 3.4%, driven by a 25% surge in gold prices and renewed interest in resource stocks. Materials outperformed, while Energy and listed property lagged. The rally in gold was particularly notable, reflecting investor demand for inflation hedges and safe-haven assets amid global uncertainty. Reporting season in August saw many companies push to new highs. However, earnings guidance upgrades were limited, and valuations expanded further.
In the domestic component of the portfolio, performance was impacted by the strength in the Materials sector, particularly within the gold subsector. Ethical screening led to a natural underweight in gold miners, which detracted from performance. Our stock selection in REITs and Information Technology assisted performance. Within Information Technology, our holding in SiteMinder increased more than 60% driven by strong product traction, improving financial metrics and positive sentiment.
In the International component of the portfolio, stock selection in Information Technology and Financials negatively impacted relative performance, while our underweight exposure to Consumer Staples and our overweight exposure to Communication Services assisted performance. The performance of the “Magnificent 7” was mixed with Alphabet, Apple, NVIDIA and Tesla (not held) outperforming the benchmark, while Meta, Microsoft and Amazon (not held) posted below-benchmark returns. Alphabet’s share price rose 14% in September alone, and over 35% for the quarter overall, marking its best quarterly performance since 2005. The company’s share price surged due to strong earnings growth, momentum in AI products like Gemini, a favorable antitrust ruling, and increased investor returns through dividends and buybacks.
Outlook for the Fund
Looking ahead, investor focus will remain on central bank policy paths, earnings resilience, and geopolitical developments. While valuations are elevated, the combination of monetary easing and strong corporate fundamentals provides a constructive backdrop for risk assets. However, sector and factor rotations, particularly in high-beta and AI-linked names, warrant a selective and risk-aware approach.
Diversified Shares (Wholesale) Fund Performance
As at 30 September 2025*
| fund | benchmark^ | |
|---|---|---|
| 3 months | 2.9% | 5.3% |
| 6 months | 13.6% | 14.4% |
| 1 year | 13.5% | 13.9% |
| 3 years p.a. | 15.7% | 17.2% |
| 5 years p.a. | 12.4% | 14.0% |
| since inception p.a. | 12.3% | 8.7% |
^Benchmark is 75% S&P/ASX 300 Accumulation Index and 25% MSCI World ex Australia Index.
*Past performance is not a reliable indicator of future performance.
Inception date: 23/01/2012.
Diversified Shares (Retail) Fund Performance
As at 30 September 2025*
| fund | benchmark^ | |
|---|---|---|
| 3 months | 2.8% | 5.3% |
| 6 months | 13.3% | 14.4% |
| 1 year | 13.1% | 13.9% |
| 3 years p.a. | 15.2% | 17.2% |
| 5 years p.a. | 11.9% | 14.0% |
| since inception p.a. | 8.5% | 8.7% |
^Benchmark is 75% S&P/ASX 300 Accumulation Index and 25% MSCI World ex Australia Index.
*Past performance is not a reliable indicator of future performance.
Inception date: 03/11/1997.
Contributors and detractors
Top 3 contributors to Fund return
+88.8%
Pilbara Minerals Limited (B23)
+15.1%
Westpac Banking Corporation (607)
+12.2%
National Australia Bank Limited (662)
Top 3 detractors from Fund return
-8.3%
Commonwealth Bank of Australia (621)
-16.3%
CSL Limited (618)
-12.8%
Woolworths Group Ltd (698)Contributors
- Pilbara Minerals (PLS) returned 88% over the quarter as spodumene prices performed strongly over the period, primarily driven by the suspension of a major Lithium project in China raised prospects of temporarily tighter supply outlook. While near term price movements are difficult to predict, PLS is strongly positioned with a Tier 1 asset, strong balance sheet with approximately $1B cash balance, and a relatively favourable position on the cost curve. In addition, we remain positive on the longer-term demand/supply fundamentals of the nascent lithium industry, and our investment in PLS is well placed to benefit and realise further upside from current levels.
- Westpac Banking Corp (WBC) rallied strongly in the September quarter, returning 15.1%, driven by a combination of margin expansion, capital management via buybacks and improving investor sentiment around its transformation strategy. Overall, the quarter reinforced Westpac’s positioning as a core Australian bank benefiting from a steady operating rebound.
- National Australia Bank (NAB) returned 12.2% over the quarter, driven by improving core banking momentum and stronger net interest margin dynamics. The bank reported a slight uplift in cash earnings and growth across business and home lending, which helped underpin investor confidence. At the same time, NAB flagged higher operating costs tied to a payroll remediation review, representing a near-term headwind to expense control. Overall, the quarter was characterised by resilient lending momentum and margin improvement that offset some one-off cost pressures, leaving the bank better positioned on earnings visibility as markets priced in a more positive outlook for the major banks.
Detractors
- Commonwealth Bank (CBA) share price fell 8.3% over the quarter despite reporting a strong full-year result driven by robust underlying earnings and healthy net interest margin momentum— all of which reinforced the bank’s core profitability and capital position. However, the market reaction was muted: investors pared back positions as they questioned whether the good news was already priced in and weighed near-term risks around inflation, the path of interest rates and expense execution. The bank’s relatively high valuation also made it more susceptible to profit-taking and a sector rotation away from richly priced names.
- CSL (CSL) shares fell 16.3% over the quarter, driven by a slightly softer FY26 outlook and ongoing uncertainty surrounding US pharmaceutical industry tariffs. While management’s communication at the result could have been more effective, the long-term investment thesis remains intact, supported by sustained global demand for plasma-derived therapies. The stock continues to trade at an attractive ~15% discount to the broader industrials (excluding banks and REITs), while delivering ~10% annual EPS growth and benefiting from ongoing deleveraging opportunities.
- Woolworths Group (WOW) shares fell 12.8% over the quarter as softer trading conditions and operational challenges weighed on investor sentiment. The company flagged a transition year, with a renewed focus on cost savings and efficiency improvements, while the decision to close the MyDeal marketplace and associated impairments further pressured earnings. Weaker performance in its core food division and non-core businesses added to the cautious tone, and the share price declined as investors digested the impact of these headwinds and the time required for operational turnaround.
The rally in gold during the quarter was particularly notable, reflecting investor demand for inflation hedges and safe-haven assets amid global uncertainty.
Portfolio changes
Additions to the Fund
-
Life360, Inc. Shs Chess Depository Interests Repr 3 Sh (360-AU) engages in the development of location sharing mobile applications. It offers mobile applications, which include features that range from communications to driving safety and location sharing. It was added to the portfolio after gaining Ethical approval during the year.
-
Judo Capital Holdings Limited (JDO-AU) provides financial services to small and medium enterprises. Its services include business loans, home loans, term deposits, lines of credit and residential mortgages. The holding was initiated as part of the optimization process which aims to reduce tracking error.
-
Exelon Corporation (EXC-US) is a utility holding company operating through subsidiaries. Its businesses focus on electricity and natural gas transmission, distribution, and retail sales, while Exelon Business Services provides shared support services such as legal, HR, finance, IT, and supply management to its subsidiaries. The holding was initiated as part of the optimization process which aims to reduce tracking error.
Reductions from the Fund
-
ANSYS, Inc. (ANSS-US) was acquired by Synopsys at a 29% premium, with the transaction closing on July 17, 2025.
-
Juniper Networks, Inc. (JNPR-US) was acquired by Hewlett Packard Enterprise at a 26% premium, with the transaction closing on July 2, 2025.
-
HKT Trust & HKT Ltd (6823-HK) engages in the provision of telecommunications and related services. It operates through the following business segments: Telecommunications Services, Mobile, and Other Businesses. The holding was divested as part of the optimization process which aims to reduce tracking error.
Within Information Technology, our holding in SiteMinder increased more than 60% driven by strong product traction, improving financial metrics and positive sentiment.
Sector allocation
Sector overweights
Cash, Communication Services, Financials, Industrials, Information Technology, Real Estate, Utilities (renewables)
Sector underweights
Consumer Discretionary, Consumer Staples, Energy, Health Care, Materials
While valuations are elevated, the combination of monetary easing and strong corporate fundamentals provides a constructive backdrop for risk assets.
*Total returns are calculated using the sell (exit) price, net of management fees and gross of tax as if distributions of income have been reinvested at the actual distribution reinvestment price. The actual returns received by an investor will depend on the timing, buy and exit prices of individual transactions. Return of capital and the performance of your investment in the fund are not guaranteed. Past performance is not a reliable indicator of future performance. Figures showing a period of less than one year have not been adjusted to show an annual total return. Figures for periods of greater than one year are on a per annum compound basis. The current benchmark may not have been the benchmark over all periods shown in the above chart and tables. The calculation of the benchmark performance links the performance of previous benchmarks and the current benchmark over the relevant time periods.
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Investing ethically and sustainably means that the investment universe will generally be more limited than non-ethical, non-sustainable portfolios in similar asset classes. This means that the portfolio(s) may not have exposure to specific assets which over or underperform over the investment cycle, and so the returns and volatility of the portfolio(s) may be higher or lower than non-ethical, non-sustainable portfolios over all investment time frames.
The information contained in this document is believed to be accurate at the time of compilation.