How your portfolio performed
April 2026
The flagship Cornerstone Balanced Growth portfolio returned -2.15%
1
for the March 2026 quarter as major financial markets weakened – but did not capitulate – in response to the Iran conflict and closure of the Strait of Hormuz.
This market response was in contrast to the outbreak of the Russia-Ukraine war in 2022 when financial markets were oversold and triggered a bear market.
A prudent approach – in which we do not overreact to daily news headlines – means the portfolio was well positioned to negotiate the volatility caused by the latest conflict.
Investments worth noting include:
• An allocation to a volatility-focused fund (designed to profit when markets are volatile) run by global asset manager Amundi returned 6% 2 over the March quarter.
• An investment in a futures contract which tracks a commodities index returned 11% because of oil and energy’s particularly strong run.
• An options hedging strategy is in place to provide “insurance” if shares fall. The strategy provides protection against a portion of the shares within the “dynamic core” of the managed portfolios, if the index falls below a certain level.
• The “dynamic core” accounts for up to 35% of every Russell Investments managed portfolio and allows the use of active management to modify portfolios according to the movement of investment markets in real-time.
Direct shares: • The strongest performers in our parcel of 30 direct Australian stocks included Woodside Energy, which rose more than 50% over the quarter as oil prices rose. Mining giant BHP, in which we hold a larger position, was also up 12.9% 3 . A significant position in Telstra, up 11.7% 4 , proved a sound investment in an otherwise poor communications sector over the start of 2026.
• Solid earnings growth and strong balance sheets saw an increased investment in TechnologyOne, which also contributed positively to performance in an otherwise lagging IT sector.
• The biggest declines were in gold miners Ramelius Resources, Perseus Mining and Evolution Mining – which suffered as the price of gold fell. A small position in medical imaging firm Pro Medicus also declined during a global selloff of software shares in February.
• Overall, our direct shareholdings underperformed the S&P/ASX 100 by about -0.55% 5 in the first quarter of 2026, returning -1.42% 6 .
The outlook: Heading into the second quarter of 2026, the flagship Cornerstone portfolio is tilted towards U.S. shares and emerging market shares (or sharemarkets in developing nations). It is a cautiously optimistic position driven by the fact the U.S. is not reliant on the Middle East for oil and has a resilient economy. The strong growth in earnings produced by U.S. companies and continued AI boom means we remain overweight growth assets like shares. These are the same reasons high-yield credit was added to the portfolio over the quarter. Australian bonds also remain attractive relative to global bonds.
Russell Investments (the investment adviser for the Cornerstone portfolios) cautions the economic impact of the US-Israel-Iran war could easily flow into investments like shares. High oil prices are a tax on growth and this could mean a weaker environment for both global and Australian stocks. It is partly why we’ve kept European shares at their normal setting and why there is an “underweight” position in Australian shares.
1 Morningstar, Russell Investments
2 Bloomberg
3 Bloomberg
4 Bloomberg
5 Bloomberg
6 Morningstar Direct, Russell Investments
7 Morningstar Direct, Russell Investments
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