Portfolio update september 2026
MYPORTFOLIO CHANGE AND RATIONALE
Following the transition of the Future Wealth SMAs to our new Investment Consultant on 1 August, we have made a further change to the Australian shares part of your portfolio.
We have sold the Blackwattle Mid Cap Quality Fund in full. Part of the proceeds has been used to buy two ASX-listed companies, Dexus and Aurizon Holdings, with each taking 2.50% of the Australian shares allocation. The balance will be held in cash (upon settlement of the sale of the Blackwattle Mid Cap Quality Fund) for now and will be invested under a separate decision.
Why we sold the Blackwattle Mid Cap Quality Fund
The fund was held to give the portfolio exposure to good quality medium-sized Australian companies, and to hold up better than the wider market when conditions turn defensive. Over the six months to 31 July 2026 it fell 15.06%, while the index it is measured against fell 8.29%. In other words it fell close to twice as far, in exactly the conditions it is held to protect against.
The fund's recent results have also been driven by a single-commodity mining company and an early-stage growth company. That is not the type of exposure the portfolio holds this fund for, and the mining exposure overlaps with resources shares the portfolio already owns directly. The fund is also relatively small at around $54 million.
This decision is not about medium-sized companies being out of favour, which they have been. It is about the fund not behaving the way its mandate promised within that environment, and waiting for the market to turn would not change that.
Why we bought Dexus and Aurizon Holdings
Both companies have been chosen for their asset backing, their valuations and the income they pay, rather than for earnings growth.
Dexus is one of Australia's largest listed property groups, owning offices and industrial property. Its shares trade around 36% below the underlying value of its properties, and that underlying value has just risen for the first time since 2022. Office occupancy improved from 92.3% to 95.7%, well ahead of the market average of 85.1%, and the distribution of 37.0 cents was maintained right through the weakest part of the property cycle. That distribution represents an income yield of about 6.5%.
Aurizon Holdings owns and operates Australia's largest rail freight network, a long-life infrastructure asset backed by long-dated contracts. Profit rose 24% in the 2026 financial year and the dividend was lifted 45% to 23.0 cents. The shares are on a low valuation and offer a forecast income yield of around 8.5% once franking credits are included. The company's own board is buying back shares at current prices, which supports our view on value.
Analysts have been reducing their earnings forecasts for both companies, and we want to be clear that neither has been bought expecting earnings to rise from here. We believe those lower forecasts are already reflected in the share prices, and the case for both rests on what the businesses own, what they are worth and the income they pay. We will review both holdings formally at their next results.
The following changes have taken place:
What this means for your portfolio
Because we have sold more than we have bought, the Australian shares weighting has been reduced and cash has increased. Cash now sits at 6.74% (Lifestyle), 7.62% (Grow), 9.01% (Advanced) and 7.66% (Accelerate). This is deliberate. We would rather hold that cash briefly and make the next decision properly than commit it under time pressure, and cash is currently earning around 4.66%.
The change reduces the total cost of your portfolio. The Blackwattle fund charged 0.92% a year, and the two replacement holdings are shares you own directly with no fund fee attached.
Your portfolio's income is expected to increase. The two new holdings and the additional cash together add roughly 12 to 25 basis points to portfolio income, depending on which model you are in, before the benefit of franking credits.
Owning these companies directly rather than through a fund means full transparency over what you hold, and the ability to buy and sell on any trading day.
If you would like more information on either of the new holdings, individual company profiles are available.
Future Wealth Planning Pty Ltd is a Corporate Authorised Representative of Future Wealth Advisers Aust Pty Ltd ABN 53 636 060 609 AFSL No. 519295. This document is confidential and must not be copied, either in whole or in part or distributed to any other person. The information in this document does not consider your objectives, financial situation or needs. Before acting on this information, recipients should consider whether it is appropriate to their situation. We recommend obtaining personal financial, legal and taxation advice before making any financial investment decision. To the extent permitted by law, none of Future Wealth Partners Pty Ltd, Future Adviser Australia Pty Ltd or any of their related entities accepts any responsibility for errors or misstatements of any nature, irrespective of how these may arise, nor will it be liable for any loss or damage suffered as a result of any reliance on the information included in this document.
