Issuu

THE ROAD AHEAD Preparing clients for tomorrow’s investment landscape

Commercial real estate

ETFs

Managed accounts

Private credit

Private equity

Foreword

THE ROAD AHEAD

The financial landscape has continued to shift over 2025, creating fresh challenges and new avenues for opportunity as advisers navigate a more complex investment environment than ever before. With markets evolving, regulation tightening and client expectations rising, understanding the trends shaping modern portfolios has become essential to delivering high‑quality advice.

The road ahead – preparing clients for tomorrow’s investment landscape

This e-book offers Australian financial advisers and wealth professionals a forward-looking view on the forces influencing key investment areas, with a focus on ETFs, managed accounts, private equity, private credit, and commercial real estate. Across these chapters, we explore how each of these segments is changing, the strategies gaining momentum, and the ways advisers can position themselves to make the most of emerging opportunities in a fast‑moving market. From the continued surge in ETF adoption and the growing appeal of managed accounts for efficiency and scale, to the expanding role of private equity and private credit in client portfolios, this resource examines the evolving toolkit available to modern advice practices. Comercial real estate remains a core pillar for income and diversification, though shaped increasingly by demographic shifts, rate cycles and global capital flows.

In an environment where resilience and diversification matter more than ever, this e-book highlights the structures, solutions and insights advisers need to help clients reach their long-term financial goals. By understanding the interplay between public-market tools like ETFs and privatemarket opportunities across equity, credit and property, advisers can offer more nuanced and strategic guidance – empowering clients to navigate today’s complexities with greater clarity and confidence. We hope this e-book provides the perspective and knowledge needed to support your clients through the changing landscape ahead, ensuring you remain a trusted partner on their financial journey. Enjoy the read! Wealth Management Team

Inside

The road ahead – preparing clients for tomorrow’s investment landscape

CONTENTS 03

Shaping the future: How ETFs are transforming investment strategies in Australia

Private markets go from niche to necessity

Managed accounts in 2026: The new standard for portfolio success

Why Australia is the new commercial real estate capital magnet

Private credit in 2026: Higher volumes, higher stakes

Pimco

SHAPING THE FUTURE: HOW ETFs ARE TRANSFORMING INVESTMENT STRATEGIES IN AUSTRALIA

The Australian ETF market surged in 2025, led by strong demand for fixed income products amid changing rates and regulations. This article highlights the key trends from 2025 and looks ahead to the factors set to shape ETF demand in 2026, including the rise of active fixed income, global diversification, and thematic investing. Kanish Chugh, Head of ETF Sales at PIMCO

The road ahead – preparing clients for tomorrow’s investment landscape

Pimco

How did ETF flows and investor behaviour evolve throughout 2025, and what key factors drove demand across different ETF categories? ETF flows continued to dominate the Australian financial industry in 2025. According to CBOE data, the ETF market grew over 25 per cent from December 2024 to September 2025. The dollar value increase was significant, mirroring the growth seen in 2024. However, the composition of flows has shifted notably over the past few years with strong demand for fixed income ETFs on Cboe Australia. From December 2024 to September 2025, total assets in domestic and international fixed income ETF grew from about $28 billion to nearly $37 billion, representing a 32 per cent increase from the prior year. This growth was driven by shifting rate expectations, heightened demand for defensive assets, and a wave of new active fixed income ETF launches. The trend was further accelerated by APRA’s announcement in late 2024 that hybrids would be phased out. Beyond fixed income, broad-based equity strategies maintained momentum, while smart beta ETFs also saw a slight increase in flows in 1H 2025, as advisers sought differentiated strategies to mitigate some of

The road ahead – preparing clients for tomorrow’s investment landscape

the recent equity volatility. In Q2 and Q3, commodity ETFs gained traction with safe-haven assets attracting strong interest. Meanwhile, money market ETFs saw outflows as declining rates signalled a rotation into growth and income-generating assets. Which ETF sectors or themes stood out in 2025, and what lessons can advisers take from their performance? While certain thematics have boosted the performance of specific ETFs (such as uranium), these ETFs did not always attract corresponding investor inflows due to their esoteric nature and exposure to specific equity market risks. The three key takeaways for advisers are: • Diversification and rebalancing: Ensure portfolios are appropriately diversified and regularly rebalanced. One example has been the performance in physical safe haven commodities like gold, which has seen a surge in its underlying price. While there are good reasons to hold gold or commodities more broadly in a portfolio, asset allocators need to ensure their specific exposures are aligned with their investment objectives. • Maintaining dry powder: At PIMCO, we emphasise the value of having dry powder in the form of

available capital to ensure we can take advantage of opportunities as they arise. Investors should favour strategies that provide flexibility to take advantage of the opportunities across markets and asset classes. The daily liquidity of ETFs and other daily liquid funds offer such flexibility. • Replacing hybrids with more than one strategy: Hybrids offer a unique blend of equity and fixed income characteristics. PIMCO research suggests that they cannot be replicated by a single strategy. Instead, advisers should consider a combination of short-term yield strategies, core fixed income solutions and private credit to balance income, risk, and diversification. Looking ahead, what major trends or economic factors do you expect to shape ETF demand in 2026? ETF demand in 2026 will be shaped by broader macroeconomic forces rather than ETF-specific trends. Looking ahead over the next five years, we expect a world of lower trend growth and persistent structural shifts. PIMCO’s latest cyclical outlook highlights three clashing macro forces – trade frictions, the AI investment boom, and challenges to institutions – that could test conventional

Pimco

The road ahead – preparing clients for tomorrow’s investment landscape

ADVISERS ARE INCREASINGLY USING ACTIVE FIXED INCOME ETFs TO DELIVER INCOME AND RISK-ADJUSTED RETURNS, BLENDING THEM WITH PASSIVE CORE HOLDINGS TO CREATE MORE RESILIENT PORTFOLIOS Kanish Chugh Head of ETF Sales at PIMCO

frameworks and drive volatility. These dynamics will influence ETF flows and adviser strategies in the year ahead. Implications include:

adoption of active ETFs is set to accelerate, particularly in asset classes like fixed income as investors seek flexibility and alpha in a less volatile environment.

• Global growth and tech innovation: Thematic ETFs tied to AI, cloud computing, and digital infrastructure will remain in focus as innovation drives productivity gains. However, we believe these should be used as satellite exposures and investors need to be aware of the inherent shortterm/medium-term volatility.

Advisers are increasingly using active fixed income ETFs to deliver income and risk-adjusted returns, blending them with passive core holdings to create more resilient portfolios. This trend reflects a growing preference for strategies that can dynamically respond to rate cuts, yield curve shifts, and sector rotations – areas where active management can add meaningful value. While thematic ETFs will remain part of the conversation, advisers should prioritise risk management and transparency, ensuring any thematic exposure complements core allocations rather than concentrating risk.

• Rate cuts and inflation stabilisation: With mounting tariff pressures and slowing growth, central banks have ample room for interest rate cuts. With cash rates poised to decline further, the environment supports demand for fixed income ETFs as locking in today’s attractive bond yields offers durable income potential. • Global diversification: As geopolitical tensions reshape markets, global diversification becomes critical. Advisers should consider ETFs that provide exposure across regions and currencies. How do you see adviser and investor adoption of active and thematic ETFs changing in 2026 as markets stabilise and new opportunities emerge? As markets stabilise in 2026, adviser and investor

What strategies should advisers consider in 2026 to use ETFs for diversification, income generation, and risk management amid evolving market conditions? The Australian ETF market now offers over 400 products, including some best-of-breed active strategies that go far beyond the traditional low-cost, high-volume providers. In 2026, advisers should move away from simply choosing the names they know and instead focus on strategies that will help navigate volatility and uncertainty in the year ahead.

Pimco

The road ahead – preparing clients for tomorrow’s investment landscape

• Prioritise quality: Select managers with proven expertise and robust risk frameworks.

Source: 1. Cboe Australia Funds Market Reports 2. Morningstar as of 31 December 2024. Based on Morningstar U.S. Fund Intermediate Core and Intermediate Core-Plus categories and US Funds Large Blend. Institutional share class. Benchmark: Bloomberg U.S. Aggregate Index. Past performance is not a guarantee or a reliable indicator of future results. Figure is provided for illustrative purposes and is not indicative of the past or future performance of any PIMCO product. Other time periods will have different results.

• Leverage active fixed income ETFs: Compared with passive peers, these offer greater flexibility in managing duration, credit exposure and liquidity, which will be especially valuable in a shifting rate environment. In addition, according to Morningstar data, the median active bond manager outperformed their passive counterparts and the benchmark over the 10 years to 31 December 2024. • Shift from TDs/cash into short-term yield strategies: Enhanced cash solutions and shortduration fixed income ETFs can improve yield while preserving liquidity. • Explore the public–private credit spectrum: Advisers can use ETFs and global asset-based finance solutions that provide access to high-quality credit opportunities across public and private markets, balancing liquidity needs with return potential. • Diversify intelligently: Blend core exposures with complementary strategies that enhance resilience without introducing concentration risk in potentially high risk thematics or sub-asset classes.

To learn more about how Pimco can help, click here.

Important information PIMCO Australia Pty Ltd ABN 54 084 280 508, AFSL 246862. This publication has been prepared without taking into account the objectives, financial situation or needs of investors. Before making an investment decision, investors should obtain professional advice and consider whether the information contained herein is appropriate having regard to their objectives, financial situation and needs. PIMCO LLC is exempt from the requirement to hold an Australian financial services licence under the Corporations Act 2001. PIMCO LLC is regulated by the Securities and Exchange Commission under US law, which differ from Australian law. PIMCO LLC is only authorised to provide financial services to wholesale clients in Australia.

EARN Earn more from your cash PIMCO’s short-term active yield ETF puts your money to work Issued by PIMCO Australia Management Limited ABN 37 611 709 507 AFSL 487505 © PIMCO 2025 A copy of the current TMD & PDS can be obtained from the PIMCO website pimco.com/au/

VentureCrowd

PRIVATE MARKETS GO FROM NICHE TO NECESSITY Private markets are emerging as one of the most powerful opportunities for advisers, as investors increasingly seek diversification, resilience, and stronger long-term performance beyond listed markets. With global private markets growing faster than any other asset class and Australian demand rising on the back of expanding high-net-worth wealth and generational change, access has never been more important. Steve Maarbani, Chief Executive Officer, VentureCrowd

The road ahead – preparing clients for tomorrow’s investment landscape

VentureCrowd

How did investor behaviour and capital flows into private equity evolve throughout 2025, and what key factors drove demand across different fund types and investment strategies? Investor behaviour in private equity shifted notably in 2025 as market participants adapted to new macroeconomic dynamics, including higher interest rates, geopolitical risks, and inflationary pressures. The year began with robust optimism and deal flow, but escalating global uncertainties, particularly new tariff policies, led to a drop in deal value and activity in the second quarter. Despite this slowdown, investor confidence and risk appetite rebounded, with nearly two-thirds expecting deployment activity to rise over the next six months. A crucial driver behind this renewed demand was the record level of “dry powder”, which surpassed $1.6 trillion globally1. This substantial pool of capital pushed managers to seek out value creation beyond traditional financial engineering, with a focus on operational enhancements and driving organic profitability. Fund types that offered tailored private credit and alternative financing solutions

The road ahead – preparing clients for tomorrow’s investment landscape

gained traction as firms diversified away from conventional banking. ESG considerations, digital transformation, and technology adoption also became central to investment strategies, with operational efficiency and sustainability emerging as key levers for value creation. As exit environments remained uncertain and valuations adjusted, investors emphasised more deliberate, long-term deployment, reflecting a shift from the rapid pace of previous years to a more measured pursuit of lasting competitive advantage. Which segments of the private equity market stood out in 2025 and what lessons can advisers and investors draw from their performance and allocation trends? In 2025, the most prominent segments in private equity were large-scale buyouts, especially addon acquisitions, growth equity, and emerging continuation vehicles. Buyout funds, particularly those engaging in add-on investments, accounted for nearly 76 per cent2 of all buyout activity in the second quarter, a significant jump from previous years. Sponsors pursued larger add-ons to achieve scale, operational synergy, and stronger negotiating leverage, showcasing resilience in an environment of heightened uncertainty.

Growth equity gained appeal as more venturebacked companies delayed public listings, prompting demand for late-stage funding. Meanwhile, secondaries, especially continuation funds, became a popular strategy for recycling capital and providing liquidity to limited partners, reflecting a structural shift in portfolio management. For advisers and investors, the 2025 landscape highlighted several critical lessons: prioritising operational enhancements over financial leverage, embracing alternative exit strategies like recapitalisations and secondary transactions, and carefully timing allocations to access resilient and high-potential sectors. Technology, industrials, and healthcare were standout industries. Ultimately, success favoured disciplined fund selection, sector expertise, and a willingness to pursue innovation as market cycles evolved. What major trends or economic factors do you expect to shape private equity fundraising and deployment activity in 2026? Looking ahead to 2026, private equity fundraising and deployment activity are expected to rise, underpinned by a steady, if cautious, improvement in macroeconomic conditions.

VentureCrowd

IN 2026, ADVISER AND INVESTOR INTEREST IS ANTICIPATED TO FURTHER DIVERSIFY ACROSS PRIVATE EQUITY STRATEGIES, REFLECTING NEW MARKET REALITIES AND A SEARCH FOR MORE TARGETED RISKADJUSTED OPPORTUNITIES Steve Maarbani Chief Executive Officer, VentureCrowd

The road ahead – preparing clients for tomorrow’s investment landscape

Survey data indicates increasing fundraising momentum, with Limited Partner (LP) demand for resilient and flexible general partners remaining strong, despite a competitive environment for capital. Key trends include a continued shift toward value creation through operational improvements rather than financial engineering, as higher-for-longer interest rates make leverage more expensive. The convergence of fund structures, such as the expansion of continuation vehicles, evergreen funds, and co-investments, will offer LPs greater liquidity and flexibility, allowing general partners to hold on to high-performing assets longer. Digital transformation, ESG integration, and realtime portfolio monitoring will remain priorities, driving both fundraising success and eventual exit valuations. Investors are expected to favor funds with sector specialisation, AI-driven sourcing, and the agility to capitalise on opportunities in areas like AI, climate technology, healthcare, and cyber security. As competitive pressures increase, transparency, innovation, and robust ESG outcomes will be central differentiators for both fundraising and successful deployment.

How do you see adviser and investor interest in different private equity approaches – such as direct investments, co-investments, or thematic and sector-focused funds – evolving in 2026 as market conditions stabilise and valuations adjust? In 2026, adviser and investor interest is anticipated to further diversify across private equity strategies, reflecting new market realities and a search for more targeted risk-adjusted opportunities. Direct investments and co-investments will remain attractive, with LPs seeking increased transparency, tighter alignment with fund managers, and lower overall fees. Continuation strategies, sector-focused and thematic funds, especially those oriented toward AI, sustainable energy, and healthcare will see heightened attention as investors look to capitalise on both operational alpha and structural trends. The rising use of flexible fund vehicles will also give advisers and sophisticated clients more options for liquidity, enabling more nuanced portfolio construction and customisation. As market conditions stabilise and valuation multiples adjust, approaches that offer both broad diversification and precise sector exposure are likely

VentureCrowd

The road ahead – preparing clients for tomorrow’s investment landscape

to be prioritised. Investors will also remain sensitive to manager quality and track record, favouring funds with a proven history of value creation through operational improvement, disciplined M&A strategies, and robust ESG performance.

Advisers looking to optimise client portfolios for the realities of 2026 should prioritise private equity strategies focused on resilience, operational value creation, and innovation. Key approaches include:

What strategies should advisers consider in 2026 to use private equity for diversification, long-term growth, and portfolio resilience amid changing market dynamics and client expectations? Private markets are undergoing a pronounced expansion, with global industry estimates projecting assets to grow from approximately US$13 trillion today to more than $21 trillion by 20303, representing one of the fastest asset growth rates in recent history. Investment markets are shifting from public to private at the fastest rate in 25 years. We’re committed to democratising access to curated, quality private market assets, connecting wholesale investors, advisers, and innovators in a data-driven ecosystem. The demand is unprecedented, and our platform now enables access to investments that were previously gated and complex, making private markets a core part of future portfolio construction.

• Targeting sector and thematic funds specialising in high-growth or defensible industries (e.g. AI, healthcare, sustainable infrastructure). • Employing continuation vehicles and coinvestments for greater flexibility, improved liquidity, and reduced fee loads relative to traditional commingled buyout funds. • Diversifying across geographies and fund types, blending buyouts, growth equity, venture capital, and secondaries to smooth volatility and maximise return potential. • Elevating ESG-integrated and technology-driven managers, as these are increasingly linked to outperformance, superior risk management, and positive reputational impacts. • Focusing on operational enhancements and valueadd strategies as the primary source of returns, especially in an environment where leverage is more costly and exit opportunities fluctuate.

Opportunities in Australia’s private markets have seen unique momentum, with several bespoke private funds, such as the Sydney Angels Sidecar Fund 3 (SASF3), managed by VentureCrowd, oversubscribed by 350 per cent in just one week, showcasing intense investor appetite for quality assets. Previous partnerships between Sydney Angels and VentureCrowd have produced strong outcomes for sophisticated investors. The syndicate investment into ezyCollect, enabled digitally on the VentureCrowd platform, recently delivered a successful exit of about 600 per cent ROI, underscoring the quality of early-stage opportunities backed by the team behind Sydney Angels and VentureCrowd. This track record reinforces why investor interest in early-access private market opportunities has intensified as advisers seek proven managers and structured pathways to high‑growth companies. Investors in funds such as SASF3, benefit from the powerful tax-free advantages of Australia’s Early Stage Venture Capital Limited Partnership (ESVCLP) scheme, which exempts income and capital gains from eligible early-stage venture capital investments,

VentureCrowd

The road ahead – preparing clients for tomorrow’s investment landscape

from all Australian taxes (including capital gains tax). This means any profits or growth generated are received completely tax-free, significantly increasing net returns and making these funds the most attractive vehicles for long-term growth and diversification in private equity.

managers, advisers can help clients achieve not only diversification and long-term growth, but also ensure resilience in a rapidly shifting private capital landscape.

An unconditionally registered ESVCLP has flowthrough tax treatment – that is, the ESVCLP will not be taxed at the partnership level – and provides investors with a non-refundable tax offset of 10 per cent of the value of contributed capital and taxfree returns from the disposal or realisation of an investment by the Fund (provided the Fund owned the investment for at least 12 months). Advisers are also turning to property funds as highpotential additions to diversified portfolios, especially in Southeast Queensland, where strong population growth and infrastructure investment drive demand. Opportunities such as VentureCrowd’s Carrara Secure Debt Fund highlight how property-backed credit can deliver defensive income and capitalsecured exposure alongside private equity. By emphasising disciplined due diligence, regular portfolio rebalancing, and open channels with

Remember when ETFs drove significant growth in investment markets – 10x growth in 10 years – by making investing more accessible, efficient and costeffective and allowing for greater diversifications and exposure to various listed assets classes? This is that moment for private markets.

Sources 1 Morgan Stanley Private Equity Outlook 2025 2 Cherry Bekaert Advisory Private Equity Mid-Year Trends in 2025 3 Carne Atlas 2024 report or Blackrock 2025 Private Markets Outlook 4

CAIS Mercer 2025 Alternative Investment Survey

To learn more about how VentureCrowd can help, click here.

Powered by technology, scale, and a proven investment track record, VentureCrowd simplifies access, due diligence, and diversification into private assets helping advisers deliver stronger, more resilient portfolios for their clients, with institutional-grade opportunities all under one roof.

91% of advisers plan on increasing their allocation to alts in the next two years 1

Find out more or book a call with the VentureCrowd Investment team today venturecrowd.com.au/s/advisers

Sydney / Brisbane / Melbourne * Always consider the offer document before investing. Past performance is not an indicator of future results. AFSL 503381. ¹ CAIS Mercer 2025 Alternative Investment Survey

Challenger Investment Management

PRIVATE CREDIT IN 2026: HIGHER VOLUMES, HIGHER STAKES

Private credit has shifted meaningfully, moving from the buoyant post-COVID era into a more normal environment where governance and manager discipline are back in focus. As the sector matures, advisers are seeking clarity on changing risks, the regulatory outlook and where the opportunities remain in 2026 and beyond. Q&A with Pete Robinson, Head of Investment Strategy

The road ahead – preparing clients for tomorrow’s investment landscape

Challenger Investment Management

How would you describe the performance and evolution of the private credit market over 2025, particularly as investors sought alternatives amid ongoing rate and equity market volatility? The private credit market continues to mature and evolve across different interest rate and credit spread environments. The sector grew rapidly in a low rate environment following COVID when extraordinary fiscal and monetary stimulus effectively created a cushion for investors protecting them from loss. Today, we find ourselves in a more normal environmental where there is a moderate (i.e. greater than zero) level of default risk. Importantly a non-zero default environment is an environment which many private credit investors have never experienced. From a performance perspective, this means that investors are moving from having an exceptional experience to a pretty good one – put simply, returns in private credit have moderated but remain attractive relative to more traditional alternatives. The question is whether investors will be happy with just pretty good returns or have they been conditioned to expect exceptional?

The road ahead – preparing clients for tomorrow’s investment landscape

What key structural or regulatory developments in 2025 have had the biggest influence on how private credit managers operate and deploy capital? There are significant and necessary changes that are being imposed on private credit investment platforms as regulators seek to ensure the sector complies with its fiduciary obligations to investors. There are multiple regulatory developments that have the potential to significantly impact operating models and capital flows; ASIC’s investigations into platforms/asset consultants/trustees related to the First Guardian/Shield losses, the stop orders related to Target Market Determination statements, their ongoing surveillance into the private credit sector focussed particularly around management of conflicts, treatment of fees, exposure to development lending and valuation practices not to mention events offshore which have alerted investors to the fact that there is credit risk in the sector. Assessing the cumulative impact on investor risk appetite and identifying where the areas of weakness are is an important area of focus for us right now.

A NON-ZERO ENVIRONMENT IS ONE WHICH MANY PRIVATE CREDIT INVESTORS HAVE NEVER EXPERIENCED Pete Robinson Head of Investment Strategy

Challenger Investment Management

THE ENCOURAGING DEVELOPMENT WE ARE SEEING IS AN INCREASING AWARENESS OF THE VALUE OF THE NON-BANK LENDER Pete Robinson Head of Investment Strategy

The road ahead – preparing clients for tomorrow’s investment landscape

As we move into 2026, where do you see the most compelling opportunities within private credit — whether by sector, borrower type, or geography? Investors need to adjust to a world where there aren’t necessarily ‘compelling’ opportunities in private credit right now but rather just ‘good’ opportunities. Valuations are higher than they were in years gone by and prospective returns are lower. But this is true of pretty much every part of the credit market, especially public credit which we would argue is much more expensive than private markets. We like the defensive ends of the private market right now, up in quality senior secured real estate loans against established assets, investment grade asset backed finance and senior secured direct lending all offer relatively attractive returns at the moment and all offer the benefit of short dated forms of lending which allow us to quickly pivot if volatility does emerge. How do you expect the private credit market to evolve over the next year as interest rates stabilise and traditional banks continue to pull back from lending? There are certainly niches where non-banks can effectively compete with the banks but, generally speaking, banks are not pulling back from the market.

However, it is not all doom and gloom for private credit. The encouraging development we are seeing is an increasing awareness of the value of the non-bank lender. Relative to the banks, nonbanks can offer speed of execution, certainty of execution and flexibility of execution. In an uncertain environment all have value to borrowers. In 2026, the market will continue to evolve towards the alternative solutions that non-banks provide. What should advisers and investors be watching most closely in 2026 when it comes to risk management and portfolio construction within private credit? Advisers need to be aware of where regulations are heading and what that means for capital flows. I don’t think that we have widespread asset quality issues outside of some well documented issues within the construction sector. The risk for investors is being exposed to a strategy that is subject to capital outflows. Joe Longo, chair of ASIC, referred to a Minsky moment for the private credit sector as a whole but investors need to be alert to the risks of a Minsky moment for a strategy, a manager or a sector. From a portfolio construction perspective,

Challenger Investment Management

The road ahead – preparing clients for tomorrow’s investment landscape

managers need to be well diversified across names and sectors, need to accept the more normal returns on offer rather than chasing risk and run higher levels of liquidity than normal.

MAKE SURE YOU BELIEVE IN THE MANAGER AND THEIR STRATEGY - EXTERNAL OVERSIGHT IS IMPORTANT Pete Robinson Head of Investment Strategy

With ASIC conducting a review of private credit, how should advisers and investors conduct their due diligence to ensure they are in a suitable fund for their clients and what should they look for in a fund and its manager? ASIC has done really quite exceptional work on the topic so reading their reports will provide you with lots of topics to quiz managers on. Cheekily we have written a lot on this topic for many years so interested investors can head to our website and browse some of the pieces we have written on the topics of governance. If I was to put myself in an adviser’s shoes, what I would do is: 1. Try to meet lots of managers to compare and meet them multiple times; 2. Ignore returns when it comes to assessing governance, poor governance can hide poor returns; 3. Make sure that you believe in the manager and their strategy – external oversight of managers is important, but it is not a substitute for good governance and culture within the firm itself.

To learn more about how Challenger Investment Management can help, click here.

Colonial First State

MANAGED ACCOUNTS IN 2026: THE NEW STANDARD FOR PORTFOLIO SUCCESS

The managed accounts market is evolving rapidly – driven by advances in technology, growing demand for private markets and a generational shift in wealth. In this Q&A, managed accounts executive director Francy Taylor unpacks the key factors influencing investor behaviour and portfolio construction in 2026 – offering practical insights for advisers seeking to deliver value and stay ahead of the curve. Frances Taylor – Executive Director, Managed Accounts, CFS

The road ahead – preparing clients for tomorrow’s investment landscape

Colonial First State

How did investor behaviour and capital flows into managed accounts evolve throughout 2025, and what key factors drove demand across different portfolio structures and investment strategies? Investor behaviour in 2025 reflected a strong appetite for equity-driven alpha, particularly in the first half of the year, supported by resilient global markets. Australian equities remained a core allocation, and advisers increasingly sought international exposure beyond mega-cap tech, favouring mid- and small-cap segments in the US and Europe. This trend was driven by concentration risk concerns and the search for diversification outside the Magnificent Seven. As the year progressed, however, a slightly more defensive posture began to emerge. While equities remained the most accessible path to alpha, advisers and investors started to introduce protective elements into portfolios. Gold, for instance, saw renewed interest. Managed account designs evolved to incorporate nested equity sleeves within risk-based portfolios, balancing growth with diversification. Private markets attracted interest, particularly among high-

The road ahead – preparing clients for tomorrow’s investment landscape

net-worth clients, but liquidity constraints and platform limitations tempered adoption. Overall, flows into managed accounts were underpinned by a demand for transparency, efficiency and tailored risk-return profiles, reinforcing the role of managed accounts as a scalable solution for both mass-affluent and highnet-worth segments. Which segments of the managed accounts market stood out in 2025 – such as SMA, IMA, or MDA solutions – and what lessons can advisers and investors draw from their relative performance and adoption trends? Separately Managed Accounts (SMAs) continued to dominate flows and adoption in 2025, particularly across mass-affluent and platformdriven markets. Their appeal lies in flexibility, transparency and cost efficiency, supported by robust menus that span the generational needs of investors – ensuring breadth across asset classes and price points. In contrast, Individually Managed Accounts (IMAs) and Managed Discretionary Accounts (MDAs) remained niche, catering to clients seeking bespoke solutions. While MDAs can offer deep customisation, their complexity and operational demands can also limit scalability.

Lessons for advisers include the importance of aligning structure with client segment and leveraging SMAs for the benefit of the client. The more information and transparency regarding a client’s investment that is available, the better able they are to see the future benefits and their goals being achieved. This highlights the growing role of technology for digital reporting and engagement tools for advisers and their clients, reinforcing SMAs as the preferred structure for scalable advice. For investors, the takeaway is clear: managed accounts deliver both operational simplicity and access to institutional-grade strategies – with a greater likelihood of meeting their investment goals and an understanding of what is happening with their investments by way of transparency and reporting. Looking ahead, what major trends or economic factors do you expect to shape managed account demand and portfolio construction in 2026? Three major trends are set to shape managed account innovation in 2026: the demographic shift of intergenerational wealth, retirement, and the growing demand for private market access.

Colonial First State

The road ahead – preparing clients for tomorrow’s investment landscape

MOST PRACTICES ARE CONSOLIDATING AROUND FLAGSHIP MANAGED ACCOUNT MENUS AS CORE MODELS AND LAYERING IN SATELLITE EXPOSURES FOR PERSONALISATION Frances Taylor Executive Director, Managed Accounts, CFS

Intergenerational wealth will mean a large transfer of money from older generations to younger generations. The younger generations will have differing investment goals, which could result in a reset of portfolios to more growth assets and potentially stronger preference for ESG. Equally, the number of Australians entering retirement is another shift that changes the portfolio design. Advisers are under pressure to deliver scalable, outcome-oriented strategies focused on income and capital preservation. Platforms are responding by building dedicated retirement offers, but the industry must go further – developing innovative solutions that integrate with and enhance these offers. At the same time, interest in private markets is growing. Managed accounts are emerging as a key enabler of access to these complex asset classes. Regulatory scrutiny is increasing – highlighted by ASIC’s recent report on private credit – which underscores the importance of robust governance and due diligence. As private markets become more mainstream, the role of specialist managers with deep research capabilities and adequate resourcing will be critical to identifying and accessing quality opportunities.

These trends are not just shaping investment preferences – they’re transforming how advisers engage clients and construct portfolios. How do you see adviser and investor interest in different managed account approaches – such as active versus passive implementation, bespoke portfolio design, or thematic overlays – evolving in 2026 as markets stabilise and technology advances? As markets stabilise and technology advances, interest in managed accounts is evolving towards more flexible, hybrid approaches. Advisers increasingly value the ability to blend cost-efficient passive exposures with active strategies, targeting alpha in less efficient markets where skilled management can add value, such as mid-cap equities or thematic sectors. Bespoke portfolio design will remain relevant for high-net-worth clients, particularly where alternatives or tailored features are justified. However, most practices are consolidating around flagship managed account menus as core models and layering in satellite exposures for personalisation.

Colonial First State

The road ahead – preparing clients for tomorrow’s investment landscape

Ultimately, adviser and investor preferences will gravitate toward solutions that balance efficiency, personalisation and risk management – leveraging managed accounts as a flexible framework to navigate evolving market conditions and client expectations.

such as private markets or high‑yield credit.

What strategies should advisers consider in 2026 to leverage managed accounts for greater efficiency, personalisation, and risk management amid shifting client expectations and regulatory change? To maximise the benefits of managed accounts in 2026, advisers may wish to prioritise three strategies: efficiency, personalisation and risk management. Efficiency will hinge on leveraging platform technology for automated rebalancing, streamlined compliance, and scalable portfolio administration. In my view, personalisation can be achieved through curated menus offering thematic ETFs, ESG strategies and diversified fixed-income options tailored to retirement needs. Managed account providers will focus on selecting the best-of-breed manager by due diligence and ongoing monitoring, particularly as portfolios incorporate specialist exposures

By aligning investment design with demographic trends and technological capabilities, advisers can harness managed accounts to help position themselves as trusted partners in an increasingly complex wealth landscape.

Disclaimer Avanteos Investments Limited ABN 20 096 259 979, AFSL 245531 (AIL) is the trustee of the Avanteos Superannuation Trust ABN 38 876 896 681 and issuer of CFS Edge Super and Pension. Colonial First State Investments Limited is also the administrator and custodian of the Colonial First State Managed Account ARSN 167 425 649 and Colonial First State Managed Account ARSN 618 390 051.

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Colonial First State Investments Limited ABN 98 002 348 352, AFSL 232468 is the responsible entity for the Colonial First State Managed Account, available for investment through CFS Edge super, pension and investment products. This document may include general advice but does not consider your individual objectives, financial situation, needs or tax circumstances. You can find the Target Market Determinations (TMD) for our financial products at www.cfs.com.au/tmd, which includes a description of who a financial product might suit. You should read the relevant Product Disclosure Statement (PDS), Investor Directed Portfolio Service Guide (IDPS Guide) and Financial Services Guide (FSG) carefully, assess whether the information is appropriate for you, and consider talking to a financial adviser before making an investment decision. The PDS, IDPS Guide and FSG can be obtained from www.cfs.com.au or by calling us on 13 13 36 or your adviser. This information is based on current requirements and laws as at the date of publication. Published as at 12 December 2025.

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WHY AUSTRALIA IS THE NEW COMMERCIAL REAL ESTATE CAPITAL MAGNET

With population growth continuing to outpace global peers and private lenders filling the gaps left by traditional banks, advisers are entering 2026 with a rapidly evolving landscape marked by rising transaction activity, expanding private credit opportunities and increasing institutional appetite. Mark Power, Head of Income Credit at Qualitas

The road ahead – preparing clients for tomorrow’s investment landscape

Qualitas

The road ahead – preparing clients for tomorrow’s investment landscape

How did investor behaviour and capital flows into real estate evolve through 2025 and what factors drove demand? Capital flows into real estate were strong throughout 2025, across both direct property and credit markets.

These capital inflows have created some compression in returns across the sector through 2025. However, investors remain willing to accept current return levels given the strength of underlying fundamentals and the relative attractiveness compared to alternative income products.

On the institutional front, geopolitical developments are driving significant shifts. Global institutional investors, traditionally heavily weighted to the US market, are seeking diversification away from the current US uncertainty. This is directing capital towards the Asia-Pacific region, where Australia and Japan stand out as the two primary investment destinations. Australia’s compelling market fundamentals – particularly our demographic tailwinds and stable regulatory environment are proving highly attractive to this capital. For retail and wholesale investors, the search for income products intensified with the wind-down of bank hybrids. Real estate provides an attractive alternative, whether through direct property investment or real estate credit, delivering the regular income these investors require.

Which areas of the real estate market stood out in 2025 and what lessons can advisers and investors take from their performance? Residential performed strongly throughout 2025, underpinned by interest rate cuts. The market’s health is evident in strong price growth and clearance rates. Rate cuts have boosted borrower capacity and unlocked developer feasibilities – particularly as the rapid escalation in construction costs has now abated. The significant price premium of houses over apartments (1.38x median house value versus apartment value) is also shifting buyer preference towards apartments, creating opportunities in that segment. The retail property sector, which has been out of favour for some time, made a notable return in 2025 as investors regained confidence. This shift reflects strong population growth supporting retail fundamentals, combined with almost a

decade of underinvestment in the sector creating pent‑up demand. Industrial and logistics, the market darling in recent years, continued to perform well but is showing signs of moderation. Additional supply is now coming to market in response to previous shortages, resulting in longer tenant incentive periods and negative net effective rental growth in some segments – something we haven’t seen for many years. While still fundamentally sound, the sector is at an inflection point. Investors shouldn’t expect the exceptional returns industrial has delivered in recent years to continue at the same pace. Looking ahead, what major trends or economic factors do you expect to shape real estate, private credit and lending activity in 2026? The structural shift in Australian commercial real estate lending will continue to accelerate. Traditional financiers’ share of the commercial real estate (CRE) lending market has dropped from 87 per cent to 74 per cent, driven by APRA’s post-GFC regulatory reforms that imposed rigorous capital provisioning requirements on the major banks. This has created significant opportunities for private credit providers.

Qualitas

The road ahead – preparing clients for tomorrow’s investment landscape

WE ANTICIPATE GREATER ACTIVITY ACROSS COMMERCIAL REAL ESTATE MARKETS IN 2026. WHEN CONFIDENCE RETURNS, TRANSACTIONAL ACTIVITY INCREASES AS BUYER AND SELLER EXPECTATIONS CONVERGE Mark Power Head of Income Credit, Qualitas

More broadly, private credit in Australia holds just 23 per cent market share of all lending, compared to Europe (50 per cent) and the USA (68 per cent), highlighting substantial room for growth as borrowers seek flexible financing solutions. The fundamental driver behind Australia’s real estate opportunity is population growth. Net overseas migration is forecast at around 340,000 for 2025 – significantly above the pre-COVID decade average of 217,000. This will drive total population growth of approximately 440,000 people for the year. Australia has one of the highest forecast population growth rates in the developed world at a time when many countries face declining populations. Australia’s current population of 27.4 million is expected to reach 31.3 million within 10 years – a 15 per cent increase. For real estate, this means we need more of everything: for every additional million people, we require 420,000 dwellings, 4.5 million square metres of industrial and logistics property, 800,000 square metres of retail, and 11,500 hotel rooms. This demographic thematic will absolutely continue through 2026 and beyond. Combined with the positive impact of recent interest rate decreases, these factors make Australia highly attractive to

institutional capital partners – whether investing in physical real estate or credit markets. Construction financing, particularly for residential apartments, has been profoundly affected by traditional financiers’ retreat. For alternative lenders, this shift, combined with sound market fundamentals and demographic tailwinds – has opened significant opportunities. How do you see investor and adviser interest in different real estate strategies evolving in 2026 as market conditions stabilise and new sources of capital emerge? Investor interest will remain strong in residential, industrial and logistics, and non-discretionary retail. The office sector rebound will be particularly interesting to watch – we expect growing interest in value-add opportunities where properties can be acquired at attractive prices and repositioned for today’s market demands. More broadly, we anticipate greater activity across real estate markets in 2026. When confidence returns, transactional activity increases as buyer and seller expectations converge. This momentum will flow through both direct property markets and credit markets, creating opportunities for well-

Qualitas

The road ahead – preparing clients for tomorrow’s investment landscape

positioned managers and investors.

including large residential projects, hotels, office buildings, industrial sites, retail precincts, social infrastructure and mixed-use developments, with returns also influenced by geographical location and local market fundamentals. Therefore, it’s important that investors do their due diligence and understand a fund’s portfolio composition – ensuring it’s diversified by loan type, property sector, geography and borrower.

How should advisers think about investing in real estate private credit in terms of diversification, income generation and inflation protection amid shifting market dynamics? Advisers should evaluate the full risk-return tradeoff as investors seek replacement income products following the wind-down of bank hybrids. While investors are looking for defensive investments, and real estate private credit can deliver this with similar or greater returns, advisers must scrutinise the returns being generated to ensure the risk assumed is commensurate. Real estate private credit is a through-the-cycle asset class that will continue to offer defensive characteristics. Advisers should focus on funds paying regular monthly income with strong riskadjusted returns, investing across the residential, retail, office, industrial and logistics sectors. Importantly, real estate private credit isn’t just one type of loan. Loans can be provided for land development, construction or investment – each with different risk-return profiles depending on the underlying asset class, borrower quality and market conditions. They span diverse property sectors

What is Qualitas’ view on ASIC’s current review of the private credit sector? We welcome ASIC’s recent review of the private credit sector. Without clear regulatory oversight, competitive markets risk a race to the bottom – particularly in how managers treat investors and structure their practices. Greater professionalisation will help investors differentiate between managers more effectively. Not all private credit is the same. This is a specialist asset class that demands a specialist manager. Thorough due diligence and recognising these differences when selecting a manager are essential to achieving attractive risk-adjusted returns, preserving capital and unlocking the asset class’s potential.

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Seeking regular income at attractive risk-adjusted returns? Discover the growing investment opportunities of the Australian real estate private credit market with Qualitas – a leading ASX-listed real estate investment manager with a 17-year track record of performance. The Qualitas Private Income Credit Fund offers wholesale investors access to institutional-grade real estate private credit. By investing in senior real estate private credit loans, the fund provides regular monthly income at attractive risk-adjusted returns1 with a focus on capital preservation.

1. Returns are not guaranteed. Past performance is not a reliable indicator of future performance. Disclaimer: Qualitas Limited ACN 655 057 588. Qualitas Securities Pty Ltd (ACN 136 451 128), AFSL 342242. The information contained herein is for informational purposes only and does not constitute an offer to issue or arrange to issue financial products. The information contained herein is not financial product advice. This document has been prepared without taking into account the investment objectives, financial situation or particular needs of any particular person. Before making an investment decision, you should read the publicly available information carefully and consider, with or without the assistance of a financial adviser, whether an investment is appropriate in light of your particular investment needs, objectives and financial circumstances. Past performance is not an indicator of future performance.

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The road ahead – preparing clients for tomorrow’s investment landscape

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