Investment update to 28 February 2026

20 March 2026

Maintaining a steady, diversified approach during the Middle East conflict

Financial markets are currently experiencing higher levels of day-to-day movement due to the escalating conflict in the Middle East.

Periods like this can feel unsettling, but they are not unusual in long-term investing. Markets regularly respond to uncertainty by adjusting prices as new information becomes available.

So far, the conflict has had the greatest impact on energy markets, particularly oil, where supply disruptions have pushed prices higher. Financial markets tend to anticipate future risks rather than react only after they occur. In this case, markets have adjusted to reflect the possibility that oil supply disruption could continue over the coming weeks.

Beyond energy, the impact on growth assets more closely linked to economic growth, such as shares and credit markets, has been relatively measured so far.

While risks are clearly elevated, there is not yet enough evidence to suggest a significant change to the broader economic outlook or policy settings that support markets over the medium to long term.

For this reason, we are not making changes to portfolio positioning at this time.

We continue to believe that maintaining a well‑diversified and resilient portfolio is the most effective way to manage uncertainty and navigate short‑term market volatility. We are closely monitoring developments and will keep you informed if conditions change.

Avoid rushed decisions

When markets become volatile, it’s important to avoid rushed short-term decisions, stay invested and focus on your long-term goals.

When markets fall, it can be tempting to switch to a more conservative investment option. However, doing so at the wrong time can lock in losses, getting stuck there and missing out when markets recover.

You can read more about this in our recent article, keep calm and stay invested.

Performance of diversified options in February 2026

The table below shows returns for our diversified investment options for periods ended 28 February 2026¹.

Our monthly Investment Update focuses on the performance of our diversified options, where most of our members are invested.

Brighter Super offers a range of investment options to suit different goals, timeframes and risk levels, including ready-made diversified options and single asset class options.

See the latest performance of our full set of investment options.

Looking back: global market trends in February 2026

Our commentary below covers the month of February 2026. It does not include market response to the conflict in the Middle East, which began after markets closed on 28 February.

During February, global developed markets continued their positive start to the year. The MSCI World Index (hedged into AUD) posted a modest gain of 0.9% for the month, lifting total returns to 19.2% over the past 12 months.

US shares underperformed global peers, with the S&P 500 declining 0.8%. Market sentiment was shaped by changing views on artificial intelligence (AI). Investors were focussed on the potential for disruption and job displacement, as well as the rising scale of expected AI investment that need to be absorbed by capital markets.

The MSCI Europe Index (in euros) rose 3.9% over the month. Improving economic indicators and resilient corporate earnings have supported market performance in recent months. The European Central Bank (ECB) kept policy rates steady at 2.0% and emphasised maintaining a patient, data‑dependent approach to future policy adjustments. The ECB expects inflation to stabilise near its target.

Shares performance in emerging markets also advanced in February, with the MSCI Emerging Markets Index (unhedged) rising 3.7%. The MSCI Korea Index surged 22.0%, while the MSCI Taiwan Index gained 11.8%, continuing its strong year‑to‑date performance. This reflects ongoing strength in semiconductor and technology companies, which make up a large weighting in emerging market indices and are expected to benefit from continued global demand for AI infrastructure and advanced computing.

Australian shares rose 3.9% in February. Financials (+9.0%) and Materials (+8.9%) led the gains, with Consumer Staples and Utilities also contributing. In contrast, Healthcare (‑13.0%) and Information Technology (‑8.0%) detracted from returns.

Domestic market attention was also focused on inflation and the policy outlook for the Reserve Bank of Australia (RBA),which raised the cash rate to 3.85% in early February. Later in the month, Australian consumer price index (CPI) data showed annual inflation held at 3.8%. Market expectations point to additional rate rises in 2026, as inflation remains above the RBA target range.

US Treasury yields declined in February, with the 10‑year yield falling 0.30%to 3.96%, supporting returns of 1.4% for Overseas bonds. Australian government bond yields also moved lower, with the 10‑year yield declining 0.15% to 4.65%. Australian bonds returned 0.9% for the month.

The Australian dollar continued to strengthen in February, rising 1.7% against the US dollar. This occurred alongside firmer domestic inflation and expectations for further rate rises, while the US dollar also weakened modestly against most major currencies.

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