Market update - September 2026

Built for the world we are entering

For fifteen years falling interest rates lifted almost every investment. That era has ended, and the way a portfolio is put together now matters more than any single holding in it.

Jim Mills, Merit Financial Services  ·  The Merit-Morgans Partnership  ·  September 2026  ·  4 min read

From the end of the GFC until 2021, interest rates stepped down again and again, from around 5% to almost zero. Every fall in rates made shares, property and bonds look more valuable at the same time. A simple, static mix of assets did well because the tide lifted every boat.

The last five years have run the other way. Rates have climbed from 1% to around 5%, inflation has proved stickier than expected and the world has become more fragmented. The September quarter meeting of the Merit-Morgans Partnership Investment Committee came down to one line: build portfolios for the world we are entering, not the world we are leaving.

What has changed

Three forces stand out. Countries are buying from trusted partners rather than the cheapest supplier, which keeps inflation higher than it used to be. Energy security has become a national priority. And artificial intelligence has set off a wave of spending on data centres, power and equipment that is shaping up as the largest capital expenditure boom in history.

The businesses that win are changing too. The last decade rewarded capital light models such as software. The decade ahead is rewarding capital heavy businesses that build, mine, power and connect the physical economy.

Every asset has a job

The objective is no longer finding the single best investment. It is combining investments that behave differently under different conditions, so the portfolio holds up across a range of outcomes.

Each scenario has an asset already in place to respond, rather than a portfolio relying on one outcome.

How the Merit-Morgans Partnership works

The Merit-Morgans Partnership Investment Committee meets every quarter to work through current markets, economics, trends and strategy, which Merit then builds into how your portfolio is constructed and managed day to day. It is a dedicated service model between Merit and the Morgans Partnerships team led by Will Douglas, unique to Merit clients.

Merit is at the centre of all advice. Morgans acts as a fully resourced fund manager engine, with its research team, daily monitoring and direct dealing desk, to deliver the outcomes Merit sets. Morgans discusses every opportunity and strategy with Merit before any decision, communication or trade takes place, and nothing changes in your portfolio without your approval.

Why active management earns its place

Because we are not bound to own the whole market, portfolios can hold what the environment rewards and leave out what it does not. That is why Merit portfolios carry no passive Australian bond exposure and lean on floating rate credit instead, and why energy, global value and emerging markets sit at the centre of the growth allocation.

Active management is about optimised outcomes in any market and the ability to move swiftly when opportunities arise. This year the portfolios banked profits in gold, rotated into energy ahead of the Middle East conflict, took those profits and bought quality businesses that had been sold off, then returned to energy at lower prices. Each move was discussed with Merit before it reached clients, and made only with their approval. Morgans carries out the trades and administration efficiently, and charges brokerage only.

More from the September update

• Energy security: a structural shift, not a trade
• The biggest capex boom in history
• Where the earnings are
• Income in a higher-rate world
• Sophisticated investor status: what it opens up

This information is general advice only. It has been prepared without taking into account your objectives, financial situation or needs, so before acting on it you should consider whether it is appropriate for you and speak with your adviser. Past performance is not a reliable indicator of future performance. Forecasts are estimates by third parties and may not be achieved. Views are those of the Merit-Morgans Partnership Investment Committee and are current at the date of publication. Merit Financial Services Pty Ltd is a Corporate Authorised Representative (No. 416822) of Paragem Pty Ltd, AFSL 297276. Unit 41/280 New Line Road, Dural NSW 2158. Research, dealing and administration are provided by Morgans Financial Limited, ABN 49 010 669 726, AFSL 235410. Financial Services Guide.