Rudi’s View: All-Weathers In The Age Of Disruption

Rudi's View | 10:00 AM

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.