Our Model Portfolios toolkit
Access practical tools, educational materials and the latest Model Portfolios content to support your client conversations.
The first half of 2026 was marked by ongoing geopolitical shocks, sticky inflation and concentrated equity leadership. Lead Model Portfolio Strategist Uwe Helmes looks at how BlackRock’s Australian model portfolios have navigated this year’s rocky markets, and explores the more selective phase that may lie ahead.
Key takeaways
-
01
BlackRock’s Enhanced Strategic Model Portfolios returned 6% to 15% over the year to 30 June 2026 across the Conservative to All Growth risk profiles, achieving first and second quartile performance across the board versus multi-sector peers1
-
02
Overweights to equities, US shares and emerging markets, together with a strategic allocation to gold, were important drivers of performance over the period
-
03
Looking forward, the team has locked in gains from part of 2026’s equity rally, leaned further into a broader range of AI beneficiaries including emerging markets, and upgraded quality in bond allocations
Selectivity has mattered this year
Markets have advanced over the past year, but they have not done so in a straight line. Investors have had to absorb tariff uncertainty, renewed concern about AI valuations, conflict in the Middle East, alongside sticky inflation and changing expectations for interest rates.
At the same time, corporate earnings - particularly in US technology and across parts of emerging markets – have proved more resilient than many investors expected.
The lesson is not that macro risks stopped mattering. Rather, they created unusually wide dispersion between regions, sectors and asset classes. That environment rewarded portfolios able to stay invested while targeting the markets with the strongest earnings trends and structural support.
Against this backdrop, the BlackRock model portfolios have meaningfully outperformed the median multi-sector manager across risk profiles, as illustrated in the following figure.2
Enhanced Strategic Model Portfolios - peer group comparison
Morningstar multi-sector peer-group comparison, 30 June 2026
Source: BlackRock and Morningstar as of 30 June 2026. Performance for periods greater than one year is annualised. Past performance is not a reliable indicator of future performance. Model performance returns are hypothetical and for illustrative purposes. Returns are net of underlying fund's management fees but gross of the platform's fees and any brokerage/commission costs.
Four key calls behind the result
- Favouring equities over fixed income. We maintained a constructive view through periods of market volatility including that of the Middle East shock earlier this year, underpinned by our view that economic activity and corporate earnings remain resilient enough to absorb a series of shocks. Over the financial year, global shares returned about 25%, compared with roughly 3% for global bonds.3 We retain a nimble approach to managing our risk exposures, balancing equity risk with that of duration and credit risk across different market cycles.
- Preferring US equities to Australian equities. US shares benefited from stronger earnings momentum and the continued AI investment cycle, while the Australian market lagged comparatively against the backdrop of elevated valuations and weaker earnings revisions.
- Tilting towards emerging markets relative to developed markets. Emerging market equities returned around 36% over the financial year, compared with about 15% for developed markets, with exposure to emerging markets ex China and Japanese equities among the notable contributors to active returns.4
- Using gold as a defensive diversifier. Gold returned about 16% over the financial year versus roughly 3% for bonds. Its contribution was concentrated in the second half of 2025 and it was less supportive during the first half of 2026, but the experience reinforced the value of diversifying the portfolio's diversifiers.5
The return gaps behind four key portfolio calls
Financial year total returns to 30 June 2026
Source: BlackRock, as of 30 June 2026. MSCI ACWI ex Australia Index (AUD Hedged) - “Stocks”, Bloomberg Global-Aggregate Total Return Index (AUD hedged) – “Bonds”, S&P 500 Index – “US”, ASX 300 Index – “Australia”, MSCI Emerging Markets Index – “EM”, MSCI World ex Australia Net TR AUD Index – “DM”, LBMA Gold Price PM AUD Index – “Gold”. Asset-class returns are rounded. Past performance is not a reliable indicator of future performance. Indexes are unmanaged and one cannot invest directly in an index. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
From broad market exposure to more intentional risk
Strong markets improve portfolio returns, but they also change the prospective risk-reward trade-off. Following the rally from the year's earlier lows, we used our most recent rebalance in June 2026 to lock in part of the gains and bring the growth-defensive split closer to its long-term setting.
We remain modestly pro-equity, but the emphasis has shifted from simply owning more equities to being more deliberate about where the risk sits.
AI remains central to that positioning - with the next stage of the AI buildout likely to be shaped by bottlenecks in semiconductors, hardware, electricity, cooling and data centre infrastructure.
Our portfolio calls for the months ahead
Source: BlackRock as of June 2026. Views are subject to change. For illustrative purposes only
In our view, three signposts will guide the next move for markets:
Whether earnings strength broadens beyond the largest AI beneficiaries;
If inflation remains sticky enough to keep policy rates and bond yields higher for longer; and
Whether geopolitical disruption starts to impair growth rather than simply lifting risk premia.
For now, the portfolio is designed to retain participation in the strongest structural themes while holding more cash and higher-quality defensive assets to hedge against ongoing macro and market risks.
Source: BlackRock. Refers to Enhanced Strategic Model Portfolios (balanced option). Active allocations are derived from the Balanced model holdings after the 23 June 2026 rebalance relative to the March 2026 strategic asset allocation. Allocations are targets and subject to change.
Staying invested, but adaptable
The strong performance of the past year should not invite complacency. While economic fundamentals remain resilient, many of the risks that unsettled investors earlier in the year have yet to dissipate, and elevated valuations make markets more susceptible to volatility.
Our response is to bank some gains, preserve targeted exposure to the best earnings and AI-related opportunities, and strengthen the portfolio's defensive quality.
In a market being reshaped by geopolitical conflict, AI investment and structurally higher interest rates, adaptability is not a departure from long-term investing - it is positioning the portfolio to capture long-term opportunities and deliver enduring outcomes.
