Investment update: December 2025

Performance (%) as at 31 December 2025	3 months	1 year	10 years p.a.	Since inception p.a.
Growth (Super)	1.60%	8.82%	7.30%	8.36%
Balanced (Pension)	1.34%	8.09%	6.58%	7.46%

Source: Rest, 31 December 2025. Returns are net of investment fees and tax, except Pension, which is untaxed. The earnings applied to members’ accounts may differ. Investment returns are at the investment option level and are reflected in the unit prices for those options. Returns for periods greater than one year are annualised. Past performance is not an indicator of future performance. Inception dates are 1 July 1988 for Growth (Super) option and 13 September 2002 for the Balanced (Pension) option.

What happened over the quarter?

While 2025 delivered healthy annual returns, the last quarter was more mixed. Overseas shares kept rising, but Australian shares fell slightly as higher inflation put pressure on the market.

In the US, the longest government shutdown in history (43 days) contributed to economic uncertainty, but markets held up mostly thanks to two interest rate cuts and hopes for more in the new year. US shares (as measured by the S&P 500) rose 1.7% over the quarter .

Many other share markets also produced positive returns, especially emerging markets where AI-driven growth in Asia helped boost returns.

Inflation remained a key issue. In the US, prices stayed stubbornly high . In Australia, inflation was pushed up by rising wages, energy costs, and strong housing demand .

Australian shares (as measured by the ASX300) fell 0.9% for the quarter . The Reserve Bank kept interest rates at 3.6% but signalled the next move in rates may be up rather than down . Interest-sensitive sectors like retail and property were therefore more volatile. Nonetheless, lithium stocks were a bright spot thanks to demand for clean energy.

What's the outlook?

Looking ahead, we believe the global economy remains on relatively solid footing, but inflation is likely to remain somewhat higher than what central banks would hope for.

Geopolitics continue to make headlines but last year, many investment markets continued to rise overall, mostly thanks to government and central bank actions that supported such economic growth. We believe much of these policy changes to support growth are behind us and expect that economic growth in 2026 is likely to be more modest. Key risks remain, including around tariffs and how companies absorb or pass through these added costs.

Currently, inflation remains above central bank targets in both the US and Australia. In Australia the interest rate set by the RBA is currently on hold. We would need to see signs of inflation easing to reduce the likelihood of the RBA increasing interest rates. Looking ahead, interest rates are more likely to ease in Europe and the US which should support global bond markets.

The global backdrop still remains supportive of share markets overall . However, following years of strong share market growth, many company prices are high so returns are likely to be driven more by choosing the right companies and markets than by broad market performance. We believe the outlook for company earnings remains broadly positive , but fast-moving themes like artificial intelligence are creating both opportunity and uncertainty as questions remain over which companies will be long-term winners.

In an uncertain environment, we believe diversification and a focus on high-quality assets are especially important. As we look ahead, Rest’s long-term, well-diversified and forward-looking investment approach aim to put our diversified portfolios in good stead for 2026 and beyond.

When global ties weaken: the impact of a more fragmented global economy

For decades, countries and economies became more connected through trade, investment and global supply chains. This period of greater global integration, or globalisation, helped support strong economic growth around the world.

More recently, the trend has started to reverse -causing what’s called global fragmentation.

What is global fragmentation?

Global fragmentation happens when countries become less connected, making it harder for goods, services and money to move freely across borders. It is often driven by trade restrictions, different rules in each country and political tensions. As a result, politics are playing a bigger role in economic outcomes, and the global environment has become more complex and less predictable.

In 2025, this fragmentation became clearer. The US raised tariffs on some imported goods, and other countries responded with their own trade measures . So far, the impact to supply chains and consumers has been overall limited, but the longer-term effects are still unfolding . Over time, this shift is likely to mean slower global growth, higher inflation and more market ups and downs.

Global fragmentation is part of a broader trend known as deglobalisation, where countries trade more with trusted partners, try to protect local industries and look to rely less on global supply chains.

Growing your retirement savings in a more fragmented world

Deglobalisation is one of Rest’s five long term megatrends that we believe will play a key role in shaping society and investment markets in the years ahead.

In this environment, Rest continues to take a selective approach to investing across countries and regions. We focus on assets that can help protect against inflation and benefit from these structural changes. This includes investments such as domestic logistics assets and infrastructure linked to energy security and the transition to cleaner energy.

We believe this approach will help us in reaching our goal of delivering long‑term returns that grow members’ savings above inflation in a more fragmented world.