Investment Updates

Australian Communities Foundation’s portfolios concluded the calendar year with strong results, delivering a 7.3% return over 12 months and 9.4% return over three years to 31 December 2025.

These outcomes were achieved during a year shaped by shifting economic and political conditions and uneven performance across global markets. Despite this volatility, the portfolio continued to move steadily through this environment. That steadiness speaks to the portfolio’s long-term approach rather than the passing conditions of any single quarter.

Responsible investment remains the foundation of this performance. Grounded in purpose and long-term principles, our stewardship emphasises stability, discipline and clarity of purpose. By adjusting the mix of our investments, including adding more flexible fixed income assets and diversifying into more global shares, we’ve put the portfolio in a stronger position to deal with shifting markets. These choices work quietly but deliberately in the background, helping ensure donors’ philanthropic capital remains resilient across a wide range of scenarios.

At the centre of our approach is patient capital. That is, the understanding that meaningful results compound over years, not quarters. The strength of the portfolio’s performance underscores why we prioritise long-term outcomes over short-term fluctuations. Your philanthropic funds are managed with this steady, enduring perspective, supporting financial growth over the long term and positive impact across the communities we serve.

Thank you for your continued trust.

Daniel Brugaletta
Chief Financial and Operations Officer

Long-Term Fund

Short-Term Fund

Strategic Objective (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 a challenging geopolitical climate, Australian Communities Foundation (ACF) long-term portfolios have provided a resilient 7.3% return for the year to 31 December 2025. The Short-Term portfolio has provided a return of 5.5% for the year.

Quarterly Highlights 

The long-term portfolios were broadly flat this quarter. Equities remain challenging, as record valuations in some sectors, including technology and metals such as gold and silver, are offset by much lower returns in areas related to consumer confidence and healthcare.

In a year when the AUD appreciated by about 9% against the USD, the portfolio’s 40% currency-hedged position in international shares helped protect returns.

Returns in the defensive part of the portfolio have remained above the benchmark as Australian markets adjusted to the expectation of interest rate rises. A majority of the portfolio is in variable or short-term securities, thus able to take advantage of rising interest rates.

The transition of the portfolio to a higher weighting of international equities is now complete, and attention is now focused on finding alternative investments that meet both financial and impact objectives.

Over the quarter, global stock markets rose, though some regions performed better than others. The US underperformed (S&P 500 +2.4%, Nasdaq +2.6%) following a December Federal Reserve rate cut and volatility driven by concerns around AI-related expenditure, while Japan (+12.1%) and Europe (+6.2%) outperformed.

Australian shares fell (-1.4%), lagging global markets, as higher-than-expected inflation and firm RBA messaging pushed bond yields up and bond prices down. The materials sector performed strongly (+12.9%) on the back of firm commodity prices, while healthcare, technology, and consumer-focused stocks weakened overall returns.

Looking ahead to 2026, analysts are keeping a close eye on two major forces that could shape markets: growing geopolitical tensions and the rise of artificial intelligence.

One hundred per cent of ACF’s investment portfolio is responsibly invested. Each investment is categorised according to the Impact Management Project framework. The impact categorisation is as follows: