FOR IMMEDIATE RELEASE
12 February 2026
Melbourne, Australia – Lonsec today released new analysis of Australian equity market performance over the 2025 calendar year, highlighting a challenging period for growth strategies, strong dispersion among active managers, and renewed momentum in the small‑cap sector. The findings also point to meaningful structural shifts driven by superannuation fund flows and the continued rise of passive investing.
Growth underperforms as markets rotate
Lonsec’s review shows that growth strategies lagged throughout 2025 as investors rotated away from structural growth and toward resources and value-oriented stocks. “We saw a clear shift in market leadership this year,” said Peter Green, Director of Research at Lonsec. “Technology and healthcare sectors contracted –19.1% and –23.9%, while resources and materials delivered impressive gains of +36.2% and +37.5%. This rotation significantly impacted growth managers’ relative performance.”
Small caps enjoy a strong recovery
After several muted years, small caps delivered excellent returns, with the S&P/ASX Small Ordinaries Index rising 24.96%. “Small caps finally had their day in the sun,” Green said. “Gold miners were a standout, buoyed by a 65% increase in the spot gold price.”
Reporting season drives investor behaviour
Lonsec notes heightened volatility around the February 2025 and August 2025 reporting periods. “We observed large price reactions when company results differed from expectations,” said Green. “Managers have been more active leading into reporting season as earnings guidance becomes an increasingly important driver of performance.”
Structural market shifts continue to evolve
The research also highlights long‑term structural changes influencing market dynamics:
- Top industry super funds account for around 12% of capital in the domestic equity market (based on 25% of member balances allocated to Australian shares).
- Passive investing continues to accelerate, shaping index composition and liquidity.
- IPO activity remained subdued, though Lonsec expects more listings in 2026 as market conditions improve.
“These structural forces are reshaping the Australian equity landscape,” Green said. “They affect everything from liquidity to price discovery and create both headwinds and opportunities for active managers.”
RELEASE ENDS
For media enquiries, please contact:
Felicity Nicholson
Head of Marketing, Lonsec
felicity.nicholson@lonsec.com.au
About Lonsec
Lonsec is one of Australia’s leading investment research houses, providing in‑depth analysis, ratings, and market insights across managed funds, ETFs, and listed investment vehicles. Lonsec empowers advisers, institutions, and investors with the information they need to make confident and informed investment decisions.
Lonsec is part of the ASX-listed Generation Development Group (ASX:GDG).
Issued by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec Research). Generation Development Group Limited ABN 90 087 334 370 is the parent company of Lonsec Research.
Warning: Past performance is not a reliable indicator of future performance. Any advice is General Advice without considering the objectives, financial situation and needs of any person. Before making a decision, read the PDS and consider your financial circumstances or seek personal advice. Disclaimer: Lonsec Research gives no warranty of accuracy or completeness of information in this document, which is compiled from information from public and third-party sources. Opinions are reasonably held by Lonsec Research at compilation. Lonsec Research assumes no obligation to update this document after publication. Except for liability which can’t be excluded, Lonsec Research, its directors, officers, employees and agents disclaim all liability for any error, inaccuracy, misstatement or omission, or any loss suffered through relying on the document or any information. ©2025 Lonsec Research Pty Ltd. All rights reserved. This report may also contain third party material that is subject to copyright. To the extent that copyright subsists in a third party it remains with the original owner and permission may be required to reuse the material. Any unauthorised reproduction of this information is prohibited.
