The second quarter of 2026 was shaped by a mix of improving market sentiment, shifting interest-rate expectations and continued debate around the sustainability of narrow market leadership. While investors had to navigate geopolitical uncertainty, volatile commodity prices and persistent inflation risks, diversified portfolios were generally rewarded over the quarter.
Local markets
Locally, South African markets had a mixed quarter, with June reflecting some of the cross-currents seen throughout Q2. Resource shares came under pressure as precious metal prices softened, weighing on the broader equity market. However, financials, listed property and bonds delivered more encouraging returns, supported by improved fiscal sentiment and growing confidence in South Africa’s economic outlook. The country’s credit outlook also improved during the period, reinforcing the view that local assets continue to offer attractive long-term value. While the rand softened slightly against the US dollar in June, it remained stronger over the broader period. With inflation relatively contained and bond yields still compelling, South African assets continue to play an important role in diversified portfolios.
Global markets
Globally, markets delivered a strong first half of 2026, although returns became increasingly concentrated in a relatively narrow group of companies linked to the artificial intelligence and semiconductor value chain. US equities continued to benefit from resilient economic growth and significant investment in AI infrastructure, while Europe and Japan also produced positive returns over the quarter. At the same time, investors faced a more complex backdrop as inflation remained persistent, central banks adopted a more cautious stance on interest rates, and geopolitical tensions periodically weighed on sentiment. As the quarter progressed, markets became more selective, highlighting the importance of diversification and active risk management as valuations and optimism in certain areas became increasingly demanding.
Portfolio performance
Kanan Wealth portfolios delivered positive returns across the local model range over the quarter, with the more growth-orientated strategies benefiting most from improved risk appetite. The local models produced three-month returns ranging from 1.85% to 7.80%, while the higher-equity strategies continued to show strong longer-term outcomes. Notably, the Kanan Wealth Capital Accelerator and Special Opportunities models delivered strong three-month returns of 5.08% and 4.76% respectively, while the Global Growth model returned 7.80% over the same period.
Offshore portfolios also had a strong quarter, supported by resilient global equity markets and continued strength in growth-related sectors. Offshore model returns over three months ranged from 3.71% to 12.68%, with global equity and capital growth strategies leading the performance. This reflects the benefit of maintaining global exposure, particularly in periods where offshore markets are supported by structural growth themes and stronger earnings momentum.
Final thoughts
The first half of 2026 reinforced the value of a disciplined and diversified investment approach. Locally, South African assets continue to offer attractive yields and valuation opportunities, while globally, markets remain supported by powerful structural themes but increasingly narrow leadership. As always, our focus remains on building resilient portfolios that can participate in market growth while managing risk through changing economic cycles.
Past performance is not a reliable indicator of future returns. Investment values may rise and fall, and investors may not receive back the full amount invested.
Fundhouse Investment Advisors (Pty) Ltd (FSP 43960) and Kanan Wealth Pty Ltd (FSP 36443) are authorised financial services providers