Investment Updates

As we share this quarter’s update, I’m pleased to report that our 100% responsibly invested portfolios have delivered strong results despite ongoing global uncertainty. 

Both our long-term and short-term portfolios have performed well over the past year, reflecting the resilience of our endowment-style investment approach.  

Working with our advisors at Koda Capital, we continue to focus on building diversified portfolios designed to withstand market cycles and support sustainable, long-term growth. While markets will always experience periods of volatility, our strategy is built to balance opportunity and risk, ensuring your philanthropic capital remains well-positioned for the future.  

Thank you for your continued trust in Australian Communities Foundation. We remain committed to stewarding your funds with care so you can focus on what matters most – creating positive impact through your giving. 

Daniel Brugaletta
Chief Financial and Operations Officer

Strategic Benchmark (in accordance with ACF Investment Policy): Long-Term: CPI + 3.9% | Short-Term: AusBond Bank Bill Index + 1%

Charts denote performance of the long-term and short-term strategies in the Main Fund. Extension and Scholarship Funds also invest in accordance with the same long-term strategy, although performance differs slightly between the entities (see above table).

Long-Term Strategy

Short-Term Strategy

Despite ongoing geopolitical challenges and uncertainty, Australian Communities Foundation’s (ACF) long-term portfolios have provided a strong return ranging from 9.95% to 10.03% for the 12 months prior to 30 June 2025. The short-term portfolio, benefiting from strong bond markets, has provided a return of 6.37% for the financial year. 

Quarterly Highlights

The June quarter was especially strong. The long-term portfolios rebounded strongly from lows in early April to end the quarter with returns ranging from 5.95% to 6.42%, more akin to annual returns than those for just three months.

The strength in the rebound was consistent across most asset classes, with both equities and bonds rallying strongly. Recent changes made to enhance diversification across equities have resulted in strong outperformance within Australian equities and a bridging of the historical performance gap within international equities.

This transition has been implemented over a period of six months to minimise timing risk. In the defensive part of the portfolio, results were mixed, as not all investments captured the rally in long-dated bond yields. Newly introduced options in diversified private credit provided robust results. With portfolio changes underway and strong new inflows, the portfolios ended the quarter overweight to cash.

Global share markets rebounded strongly after the tariff-fuelled uncertainty in early April.

In the United States, the S&P 500 rose 10.6%, while the Australian share market (ASX) gained 8.9%, buoyed by renewed strength in the banking sector. Over the past 12 months, European equities have surged 20.6%, and Chinese markets have outpaced global peers with a remarkable 28.9% gain, both outperforming the US.

Momentum in share markets appears to be increasingly driven by investor sentiment rather than company fundamentals. With unresolved trade tensions, mixed economic signals, and central banks holding steady (or reducing interest rates slowly), the need for diversified portfolio construction and measured tactical changes remains critical.

In Australia, bonds rallied strongly on expectations of further interest rate cuts. Inflation eased from 2.4% in March to 2.1% in June, signalling likely rate reductions to follow.