Rudi's View | Jul 22 2026
This story features 4DMEDICAL LIMITED, and other companies.
For more info SHARE ANALYSIS: 4DX
The company is included in ASX200, ASX300, ALL-ORDS and ALL-TECH
In an era of significant disruption, everything 'old' needs to be questioned and re-assessed, including the concept of All-Weather stocks.
By Rudi Filapek-Vandyck, Editor
By Rudi Filapek-Vandyck, Editor
All-Weathers In The Age Of Disruption
Multiple tectonic changes have turned investing in Australian equities since mid-2025 into a truly challenging and frustrating experience, particularly for active investors in individual stocks.
At the index level, the ASX200 returned 6.10% for the year ending 30 June 2026, but dividends contributed 3.34%, leaving only 2.76% in capital appreciation.
Large caps functioned as comfortable safe havens amid uncertain circumstances; on average the gap with lagging smaller caps widened further.
Under The Market’s Bonnet
One way of illustrating the underlying bear-market-like conditions is through the fact that 65.50% of all ratings for ASX-listed companies from the seven stockbrokers monitored daily by FNArena are Buy-equivalents, against only 28% Neutral/Holds and just 6.50% Sell ratings.
Before the covid pandemic, such a high percentage of Buy-equivalent ratings would occur only during bear markets. Think of the second half of 2018, the eurozone crisis and the GFC.
Since 2020, such an unusually high percentage seems to have become a permanent feature of the Australian share market, indicative of momentum trades becoming more prominent, but equally a sign that out-of-favour stocks and segments remain largely ignored for much longer than they used to.
Exactly how challenging conditions have been for most active stockpickers becomes apparent when we look at the statistics underneath the index.
As the market rotated away from previous winners in the second half of last year, the first half of FY26, 124 members of the ASX200 (62%) achieved a positive return, versus 76 stocks (38%) being de-rated.
Those numbers reversed dramatically in 2026, with only 77 stocks (38.5%) appreciating between January and 30 June.
The gap between the average share price return and median performance points to outsized returns from a small group of stocks, while the majority returned only modestly, if at all.
The first half of FY26 (July to December) shows a median return of 7.65% for the 200 stocks, but an average return of 28.58%.
For the second half (January to 30 June), both calculations are negative: a median of -4.54% against an average of -4.21%.
It goes without saying the experience has been sharply different for those who held shares in 4DMedical ((4DX)) (up 1587.50%) or Electro Optic Systems ((EOS)) (up 220%), or those who managed to get on board when lithium shares went for a big run.
But for the majority of market participants, FY26 does not sustain many fond memories.
That conclusion is drawn from plenty of anecdotal input, including feedback from FNArena subscribers, general commentary on social media platform X and shared impressions across the local industry.
Here’s one humorous post from a local fund manager on X:
Does anyone know how to make money in ASX small caps?
If you do, message me!
All-Weathers Become Friendless
FY26 has been an incredibly tough year for investors in the Australian share market. The FNArena-Vested Equities All-Weather Model Portfolio has been no exception.
In mid-2025, the Portfolio had returned 13.85% for FY25 and 5.10% for the first six months of the calendar year, broadly in line with and slightly behind the ASX200’s respective returns of 13.81% and 6.44%.
The two prior years had each generated returns in excess of 20%, lifting the longer-term numbers well above the market average.
FY25 marked the All-Weather Portfolio’s tenth year in operation, with an average annual return of 11.08% and a CAGR of 10.85%.
The total cumulative return had grown to 180.22% over a period that included only one negative annual result: -2.59% for FY22.
Things have changed dramatically since.
This time last year, we sensed market momentum was about to migrate away from the local winners, including the sturdy and solid All-Weathers held inside the Portfolio.
What we didn’t envisage was the savage onslaught that has since de-rated just about anything that used to trade on an above-average valuation multiple.
The numbers speak for themselves: from a positive return of 5.10% at the halfway mark, the Portfolio’s return sank to -12.28% by year-end 2025.
While the past three months have delivered relative outperformance, the return for FY26 has remained stuck at -10.08%.
The Roaring 2020s
At this point, it’s probably apt to remind everyone the All-Weather Model Portfolio draws inspiration from my personal research into identifying business models of above-average quality with the ability to grow shareholder rewards over long periods.
Because such businesses are quite rare on the ASX, and because we also have an educational ambition when it comes to portfolio construction, the All-Weather Model Portfolio includes lower-risk, dividend-paying stocks alongside some of the more exciting, higher-quality emerging business models.
Combining the likes of Car Group ((CAR)), Macquarie Group ((MQG)), TechnologyOne ((TNE)) and Wesfarmers ((WES)) with HomeCo Daily Needs REIT ((HDN)) and Telstra ((TLS)) on the one hand, and Hub24 ((HUB)), NextDC ((NXT)), WiseTech Global ((WTC)) and Xero ((XRO)) on the other, has served the All-Weather Portfolio well for ten volatile years.
During that period, our key point of reference has been the Roaring Twenties, when innovation accelerated and defined an era that gave birth to the modern-day mass-consumer economy, as well as widespread credit, share ownership, greater social freedom and general electrification.
The key difference today is that many existing business models will be challenged by newly developing technological breakthroughs.
The experience of the past year shows investors are not prepared to wait and see which businesses might be affected. They sell first, making sure they won’t be around when the proverbial hits the fan.
Separating Winners From Losers
Underneath day-to-day share price movements, equity markets, including the ASX, have essentially become derivatives of global AI development, with markets polarised between beneficiaries and potential losers.
Recent analysis by UBS suggests likely beneficiaries are trading at a notable premium to their peers within the same sector, though it is not 100% certain this is the only factor underpinning that premium.
CommBank ((CBA)) would be one prime example.
Besides, AI development is not the only disruptive force on the horizon, with share prices of local telcos weakening recently as Elon Musk’s SpaceX puts the global mobile sector in its sights, including in Australia.
With the assistance of Harry Hindsight, we can now also conclude the local healthcare sector has –five years later– still not recovered from the covid pandemic.
Social inequality, higher inflation, government budgets under stress and the return of the Trump administration in the US certainly have not helped.
As the best-performing sector on the ASX before 2021, by a long shot, top performers CSL ((CSL)), Cochlear ((COH)), Fisher & Paykel Healthcare ((FPH)) and ResMed ((RMD)) had long featured prominently in my research and inside the All-Weather Portfolio.
The sector’s de-rating in recent years has been relentless, brutal, persistent and without exception.
Which naturally raises the question: is the concept of All-Weathers something from the pre-disruption past?
Will the experience of CSL & Co become the blueprint for the future of Aristocrat Leisure ((ALL)), REA Group ((REA)), Woolworths Group ((WOW)) and the like?
The honest answer is nobody knows, but companies including TechnologyOne and Pro Medicus ((PME)) are showing us that the future for Australian businesses, including yesteryear’s premium achievers, is not by definition bleak.
Convince the market of your ability to grow and use new technology to your advantage, and your share price will be re-rated.
TechnologyOne shares have rallied from close to $20 to just under $30. In between, they reached $33. FNArena’s consensus target seems to have settled at $32 for the time being.
Shares in Pro Medicus have rallied from $108 to $185, having traded as high as $213. FNArena’s consensus target currently sits at $221.
Both examples show investors and local business leaders that the rewards of success can be substantial. In the same breath, that’s a lot easier said than done, of course.
It may well be that general scepticism sticks around for much longer than shareholders in, say, Gentrack Group ((GTK)), Seek ((SEK)) and Xero would like.
But the broader message for investors remains the same: investing in companies from now on requires taking a view on potential disruption, whether from AI or otherwise.
If you happen to own companies for which such questions seemingly have not yet been asked, you should expect those questions to arrive.
Assuming otherwise seems not only extremely naive but also very dangerous.
My curated lists on the FNArena website: https://fnarena.com/index.php/analysis-data/all-weather-stocks/
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