May, 2026
Monthly Commentary
Paradice Australian Equities Team
Paradice Australian Equities Fund May 2026 Commentary
Performance
The portfolio returned 87bps and underperformed the S&P/ASX200 Total Return Index (ASX 200) by 28bps over the month net of fees1.
Key Contributors/Detractors
Positives
- CSL (Underweight) – underperformed post a lowered FY26 earnings guidance driven by weaker plasma and albumin sales
- BHP Group (Overweight) – outperformed, supported by higher iron ore and copper prices
- Commonwealth Bank (Underweight) – underperformed post a weaker than expected earnings result and potential negative market reaction to Federal budget announcements.
Negatives
- Brambles (Overweight) – declined on a surprise warning citing repair capacity constraints and subcontractor turnover.
- ASX (Overweight) – weakened on higher than expected first time FY27 cost guidance
- Seek (Overweight) – underperformed, possibly due to a softer employment outlook
Australia’s housing market was already slowing from rate hikes, and we see broad headwinds as a new equilibrium is reached. We believe the budget announcements are likely to result in reduced housing turnover, reduced investor demand and contribute to outright house price declines, and a deterioration in credit quality. This may manifest in banks earnings downgrades in coming quarters the severity of which will be determined by where interest rates and credit growth ultimately settles, in our view. The following chart suggests that house prices are already declining (in annualised terms) in Sydney and Melbourne.
More broadly, we are cautious on the outlook for the Australian economy given the combined impact of tightening policy conditions and sharper price and volume impact from the ongoing global fuel supply shock and thus have rotated exposure away from domestic cyclicals towards select offshore earners where growth is likely to rebound sooner.
In contrast, the US economy continues to show signs of strengthening with US job growth surprising to the upside. Hiring is broad based across manufacturing, construction, hospitality and healthcare. The bond market is increasingly factoring in probability of a Fed rate hike later in the year should inflation begin to rear its head.
Portfolio Positioning
During May, we have added and trimmed select exposures. Positions in Coles, Ramsay Group and BHP Group were added, whilst ASX, Northern Star and A2 Milk were reduced.
For any other questions in relation to the Fund, please contact distribution@paradice.com.
For further details on fund positioning please refer to the Paradice Australian Equities Quarterly Fact Sheet.
1 All indices are Total Return Indices unless otherwise stated.
All MSCI data is the property of MSCI. No use or distribution without written consent. Data provided “as is” without any warranties. MSCI and its affiliates assume no liability for or in connection with the data. Please see complete disclaimer in https://paradice.com/au/terms-conditions/)
Disclaimer:
This material is prepared by Paradice Investment Management Pty Ltd (ABN 64 090 148 619 AFSL No 224158) (Paradice, we or us) to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information.
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Equity Trustees Limited (ABN 46 004 031 298, AFSL No. 240975) (Equity Trustees) is the responsible entity of, and issuer of units in, the Paradice Australian Equities Fund (Fund). Equity Trustees is a subsidiary of EQT Holdings Limited (ABN 22 607 797 615), a publicly listed company on the Australian Securities Exchange (ASX:EQT).
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Contributors:
Julia Weng