Joining Zenith’s portfolio solutions team and based in Sydney, Charl Marais brings more than 20 years of experience across portfolio management, manager research and selection, and multi-asset strategies.

Most recently, Marais was a senior portfolio manager at Yarra Capital Management, where he oversaw investment performance across the business’ funds and mandates, and held responsibility for external manager research and selection.

Prior to Yarra Capital, he was a senior portfolio manager at Nikko Asset Management. He has also held roles at Suncorp Group, Morningstar, and earlier in his career at Absa Bank. Marais holds a Chartered Financial Analyst (CFA) designation and a Financial Risk Manager (FRM) certification, as well as a Bachelor and Master of Chemical Engineering from Stellenbosch University.

Marais will report to head of portfolio solutions, Andrew Yap, who says the appointment reflects the growing demand for Zenith’s portfolio management capabilities.

“Charl brings a depth of experience that spans institutional portfolio management, external manager research, and multi-asset portfolio construction across some of Australia’s most respected investment firms,” Yap says.

“His experience demonstrates exactly the kind of rigorous, performance-focused approach our growing client base expects. We’re looking forward to the expanded capacity his appointment will bring to the team.”

Cave rejoins Zenith having originally entered the business in 2017 as a senior investment analyst, before departing in 2023.

He returns to Zenith from Frontier Advisors, where he spent three years as a senior investment consultant on the real assets team conducting manager research and advising institutional clients on private infrastructure. He holds a Bachelor of Economics and Finance from RMIT University.

In his new role, he will be based in Melbourne and report to head of income research and head of sustainability, Dugald Higgins. Higgins welcomed Cave’s return to the business.

“Dan has deep expertise in income research and a thorough understanding of how Zenith operates – he knows our standards, our methodology and our clients,” Higgins says.

“He returns with a broader perspective on the institutional market and a sharper focus on private markets, which adds a valuable dimension to our income research capability. This is a newly created role and Dan will play a central part in continuing to strengthen our offering.”

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Damien Hennessy

Australian equities are likely to remain under pressure in 2026, with a combination of limited domestic exposure to artificial intelligence and relatively tight local monetary policy making it difficult to build a strong case for the broad local market, Zenith head of asset allocation Damien Hennessy says.

“The lack of AI exposure in the Australian market has been a factor, but our interest rate positioning is also a headwind for markets, particularly when you go it alone,” Hennessy says.

“Australia’s monetary policy path is encouraging investors to look elsewhere. Rate hikes will eventually impact growth, and that gives investors an excuse to look to other areas where growth outlooks are improving.”

Hennessy says while the ASX’s materials and resources sector has provided some relief, most large cap stocks have disappointed.

“Australia has a healthy mining sector, but everything outside that in the large cap space has been a drag on the market, and the outlook isn’t looking much better for the rest of 2026,” Hennessy says.

“Earnings signals indicate that the most positive markets are the US and Japan. Japan also stacks up well on monetary conditions. And on a valuation basis, the UK and Europe stand out.

“Australia doesn’t really rate highly on any individual driver, and this is a problem.

“Until we start to see a valuation signal or earnings signal that looks positive, it is hard to build a case for the broad Australian market to do well. But that is not to say the resource sector specifically can’t do well.”

As a result, Hennessy prefers global equities over domestic equities but flags the global monetary policy cycle as a key risk for months ahead.

“We are overweight global equities and underweight Australia. We like the US, emerging markets and Japan specifically,” Hennessy says.

“One of the key factors we will be looking at over the next few months will be the monetary policy cycle. We seem to be coming out of a phase where the majority of central banks were easing, to a phase that could see central banks tightening.

“Traditionally, when that happens, it tends to be a headwind for the likes of emerging markets and Japan. We aren’t at that stage yet, but it is certainly something we’ll be watching closely.”

On fixed income, Zenith is more positive on Australian, Japanese and UK sovereign bonds, which it regards as trading near fair value. US bonds, by contrast, are considered relatively expensive at current levels, which Hennesy says warrants a more cautious approach.

“While we are negative on Australian equities, it’s almost the complete opposite when you look at Australian bonds,” Hennessy says.

“To build a case for rates to go above 4.6 per cent, then you’re arguing that the economy is either going to be amazingly resilient and growing at 2.5 per cent, or inflation is going to move beyond 3.5 per cent in core terms – neither of which I think is likely. So, with bond markets close to 5 per cent, I think it’s factoring in all the bad news.”

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Dugald Higgins

With global conflict driving investor interest in defence sectors, Dugald Higgins, head of responsible investment at Zenith Investment Partners, says excluding defence from portfolios can raise difficult questions for investors.

The current environment presents one of the clearest examples yet of how responsible investing is moving beyond screening frameworks and into a more complex and politically charged space. This is particularly pertinent as the Federal Government has endorsed recommendations that the Department of Defence establish a framework to enable investment providers to identify suitable finance options for future defence requirements. In April 2026, the Government also announced a $53 billion increase in defence spending over the next decade.

This follows a global trend where geopolitical tensions and government rearmament programs are driving inflows into defence exposures.

Higgins says responsible investment represents a broad spectrum of different investment approaches and isn’t binary. Depending on how fund managers design their strategies, different elements can be utilised within a broader ‘responsible’ framework.

“Responsible investment is a priority for many investors, and for years armaments have often been screened out as part of that ethical position,” Higgins says.

“However, being ‘responsible’ doesn’t necessarily mean being ‘ethical’, nor is being ethical the same as incorporating ESG considerations into an investment process.”

Investors may hold indirect exposure to the defence sector through logistics businesses, manufacturers, and technology or communications companies whose products and services are used in military settings or conflict zones. Exposure can also come through sovereign debt, including government bonds issued by countries involved in arms exports.

“The line is much harder to draw than many investors realise,” Higgins says.

“Like it or not, even the best-intentioned investors probably have some exposure to the defence sector given its broad nature of supply chains and activities. At the very least, investors can be indirectly exposed through government bonds from countries involved in arms exports such as the US, the world’s largest arms exporter.”

Global issuance of defence ETFs has more than doubled over the past year, while assets under management have increased five times to A$109 billion. Despite this, over 90 per cent of those assets are issued by managers that are signatories to the UN-backed Principles for Responsible Investment, highlighting an increasingly visible contradiction within the market.

Higgins says one of the biggest challenges is defining what defence exposure actually looks like in modern portfolios, with the debate moving from the margins to the mainstream.

“We are seeing significant growth in defence-related investment vehicles, including from managers that align themselves with responsible investment frameworks,” Higgins says.

“That naturally creates confusion for investors and raises a more fundamental question around whether defence and ESG can coexist. We believe ESG is foundational and would argue its importance when assessing defence companies which pose high levels of regulatory, financial, legal and reputational risks. But the morality of these investments is a different question.”

Defence companies can face a wide range of material ESG issues, including human rights violations, corruption, political instability, environmental and health impacts, land contamination and high carbon emissions.

Higgins says investors should be wary of treating the sector as either automatically acceptable or automatically excluded without deeper analysis.

“Investors are rightly reassessing the role of defence thematics in portfolios, particularly as the geopolitical landscape changes”, Higgins says.

The attractions are undeniable, given that the average one-year return for defence themed ETFs on the ASX was 32.4 per cent for the year to 31 March 2026, versus 11.6 per cent for the ASX 300 Index.

“But capital moving into this sector needs to be assessed through a genuine ESG lens. Labels alone are not enough. Investors need clearer definitions, greater transparency and a more rigorous understanding of the risks involved.”

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Dugald Higgins

Once exclusive to large institutions, inflows to private markets funds have been strong as investors flock to access well-performing asset classes such as private equity, credit, infrastructure and property. But while these structures provide exposure to those markets, Dugald Higgins, head of responsible investment and real assets at Zenith Investment Partners, says investors also need to be aware of the liquidity constraints of the asset class.

“The industry has experienced a period of real growth, which is typical of the later stages of a market cycle. But now we’re reaching the point where investor expectations around access to capital will meet the reality that many private market assets simply can’t be sold quickly,” Higgins says.

“Private assets are less traded, less transparent, and often require active, hands-on management to realise value. Natural liquidity stems from the underlying assets, not the fund structure.

“This shouldn’t be a disincentive to pursue attractive opportunities, but it should be done in a way that doesn’t make your portfolio vulnerable to shocks.

“Private market funds often look smoother than listed markets because assets aren’t priced daily. But that doesn’t mean the underlying value isn’t changing. When valuations are revised, this can force a market adjustment – and fast.

“Illiquidity shouldn’t come as a surprise to investors. But they often seem to forget its implications when navigating market turbulence and portfolio rebalancing. Liquidity gives asset allocators free reign to adjust to market conditions. Private markets are by nature unwieldy. Failure to critically assess these implications usually leads to disorderly behaviour when the market turns, as we are starting to see in some areas, particularly offshore. The winners will be not just those who’ve planned to navigate through these periods, but can take advantage of pockets of market dislocation.”

Andrew Yap, head of portfolio solutions at Zenith, says despite these risks, private markets remain an important component of diversified portfolios, particularly in sectors such as infrastructure and real estate.

Improved fund structures, greater platform capability, and growing adviser sophistication have steadily lowered the barriers to entry. What was once operationally complex or structurally inaccessible in private markets, is increasingly being delivered in investable formats suitable for diversified portfolios.

“For investors, allocations to private markets are best viewed as complementary exposures designed to sit alongside daily liquid portfolios, not replace them.

“The benefits of private markets don’t come without trade-offs – specifically, liquidity. Unlike daily-liquid portfolios, private market strategies typically offer periodic redemption windows, structured to align investor liquidity with the underlying assets. Illiquid assets require patient capital, and portfolios are more resilient when redemption terms reflect that reality.

Yap emphasised the critical role of deep investment research and experienced portfolio managers in incorporating private markets into client portfolios.

“You can’t assess liquidity risk, unintended portfolio biases or volatility exposure without sophisticated systems – you need to drill into the underlying holdings and understand how a portfolio would behave under stress,” he says.

Yap says investors considering private markets should go in with eyes wide open.

“Over the long term, private market funds have delivered solid returns. But investors should go in understanding that their money may be tied up for longer than they initially expect, and those funds may not always be available when they want it.”

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Damien Hennessy

Emerging Asian economies are highly dependent on imported oil, particularly through the Strait of Hormuz, so it is not surprising that these equity markets have come under pressure over the past two weeks, says Zenith Investment Partners investment director, Damien Hennessy.

Higher oil prices and the prospect of higher inflation suggest that hopes for near term rate cuts have faded, he says, and along with a stronger USD, this has undermined emerging market equities during March.

“Our view remains that emerging market equities are set to climb in 2026 driven by an improving global cycle, improved external and internal balance sheets, a modestly weaker USD and more attractive valuations compared to developed markets,” says Hennessy.

“Emerging markets have lagged developed markets since 2021. It’s been one-way traffic in favour of the United States.

“But that has shifted over the past 12 months, as investors reconsider high valuations in US equities and rotate towards cheaper opportunities across Asia and other developing economies. The USD has fallen by around 10 per cent over the past 12 months, which is a historical indicator of positive emerging market performance,” he says.

While the softer dollar has helped support US corporate earnings and share prices despite stretched valuations, Hennessy says that the opportunity now lies outside the US.

“There’s no doubt that the weaker US dollar has played a central role in the broad shift away from expensive US technology and AI stocks, toward more attractively priced AI exposures across Asia, particularly China.

“In South Korea, a couple of AI-related stocks have dominated performance although corporate reforms have also helped drive a re-rating. The market’s price-to-earnings ratio has lifted from below 8 times earnings to around 10 times today.”

In addition to more attractive valuations, Hennessy says emerging market balance sheets are in stronger shape than many developed economies, while government debt as a proportion of GDP is generally lower compared to some major global economies.

Inflation trends have also improved, with several emerging economies able to bring inflation under control and begin cutting interest rates, which has supported domestic growth and equity markets. An extended conflict in the Middle East would alter that outcome.

“There’s a combination of factors that have helped drive equities performance in emerging markets, and we believe the improvements we saw last year broadly remain in place,” Hennessy says.

“While the near term will be challenging, from a strategic asset allocation perspective, we’ve increased exposure to the asset class as it offers relative value, earnings potential and better quality than it has for many years.”

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Andrew Yap

Managed accounts are on track to exceed $400 billion by the end of the decade, with technology and tighter regulation pushing the sector towards stronger, more transparent growth, Andrew Yap, head of portfolio solutions at Zenith says.

“Managed accounts are growing rapidly and becoming a more significant part of the Australian market,” Yap says.

“The most recent figures available suggest around $300 billion in assets sits within this segment, with expectations it will grow north of $400–$450 billion by 2030. That’s a very strong growth trajectory for the sector.”

Yap says technology has made the market more scalable by strengthening risk management practices, particularly with respect to monitoring portfolio exposures, factor and liquidity analysis. Together with deepened asset allocation expertise, the two factors have been vital to the sector’s expansion in a volatile global environment.

“Over the past five years in particular, technology has transformed how managed accounts are constructed. Early models relied on simple spreadsheets that were focused on high level outputs, compared to today where we use institutional-grade systems for cash-flow modelling, stress testing and scenario analysis,” Yap says.

“You can’t assess a portfolio’s durability and probability of achieving targeted objectives without an informed understanding of liquidity, factor exposures and key risks through sophisticated systems. You need to drill into the underlying holdings and understand how a portfolio would behave under stress.

“Our approach is to synthesise what’s happening in the broader market, understand what that means for asset allocation, and identify opportunities that represent our best views and the goals of our clients.

“Technology plays a key role in supporting this process, but importantly, it doesn’t replace it.”

While the sector’s rapid growth has created opportunities, it has also attracted a significant number of new entrants to the market, which Yap says investors need to be sensitive to. At the same time, developments such as ASIC’s focus on fee and performance outcomes and platform oversight have sharpened standards across the sector, which Yap welcomes.

“If managed accounts are a path that someone wants to pursue, they need to be cautious about who they partner with. With that in mind, the onus is on us as providers to help our clients understand what’s happening in the market and why they should feel confident in our approach,” Yap says.

“The regulator’s focus on fund performance, governance and conflicts of interest will hopefully lift standards across the board, which is ultimately positive for investors.”

Yap says increased scrutiny in the sector over the years ahead will separate long-term providers from the more opportunistic players, and identify those positioned to best deliver for Australian investors.

“Longevity matters in this market. Strong governance frameworks and investment infrastructure take years to build,” Yap says.

“Managed accounts are in our DNA. We’ve been operating in this space for more than 10 years, making us one of the first movers in the sector, and we’ve built a very strong platform and framework to support our clients.”

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Dugald Higgins

Responsible investing is moving beyond what has been a challenging time as the sector adopts a more pragmatic position, according to Dugald Higgins, head of responsible investment & real assets at Zenith Investment Partners.

Mr Higgins says the sector has faced a difficult period but is now showing signs of a recovery.

“After a period of what I’d describe as a spiritual recession, we are seeing responsible investment start to turn around,” Mr Higgins says.

“Returns are coming back into line with traditional funds across many asset classes. It reinforces that integrating ESG factors is about solid investment analysis and risk management, not just ideology.”

Mr Higgins says ESG has experienced a cycle of hype, political pushback, macroeconomic pressures and higher interest rates, which all impacted the sector heavily.

“We initially saw strong commitments and sometimes aspirational targets from governments and regulators, but as the conversation matures, what we are seeing now is the broader landscape evolving,” Mr Higgins says.

“In Australia, we are in a holding pattern of sorts, awaiting final rules such as the government’s sustainability fund labelling scheme and the ongoing implementation of climate reporting standards.

“But broadly, this is a sign of a market growing up, not winding down.”

Mr Higgins says despite global political noise about rolling back reporting requirements, the economic case for sustainability is clear.

“More than 70 per cent of Australia’s export partners are in jurisdictions working to implement sustainability reporting standards,” Mr Higgins says.

“Companies have invested heavily in building this capability, and investor demand for quality data on material risks isn’t going anywhere.”

Looking ahead, Mr Higgins says the future of responsible investing will be defined by resilience.

“The managers who will lead the next phase will be those who can demonstrate how their ESG expertise provides a tangible investment edge,” Mr Higgins says.

“This could be through avoiding risk, capitalising on transition opportunities, or engaging with companies to drive better returns.

“The spiritual recession was a period of correction and reflection. Coming out of it, responsible investment is stronger and more-performance oriented.”

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Damien Hennessy

A potential productivity surge, stretched valuations, the prospect of Fed easing, and the trajectory of the US dollar are the four critical themes that will shape global markets in 2026, says Damien Hennessy, investment director at Zenith Investment Partners.

Mr Hennessy says that while recent US equity performance has been extraordinary, the path ahead depends on whether current enthusiasm for a tech-driven productivity boom against a backdrop of Fed policy easing eventuates.

“The US market is up 16 per cent year to date, following gains of 23 and 24 per cent in the previous two years. The last time we witnessed a comparable productivity surge was in the second half of the 1990s, which delivered five years of 20-plus per cent returns,” he said.

“There are clear parallels being drawn between that episode, which famously ended in the dot com bubble and burst, and now. That said, we may well be on the verge of a genuine boom in productivity.”

A significant boost in capital expenditure over the past 12-18 months, alongside a resilient consumer sector, have emerged as key factors determining whether a productivity boom eventuates.

In that scenario, Mr Hennessy says that strong corporate earnings could continue, helping to minimise inflationary risks as productivity gains allow for non-inflationary growth, which could result in an environment of steady bond yields and a steady Fed funds rate.

“This is a powerful scenario, but one that is more narrowly focused on the US tech sector. I see it as a narrative rather than an outcome at this stage, but if it eventuated, it would override concerns about valuations,” Mr Hennessy says.

“Our research places a productivity boom at a probability of around 30 per cent.”

Regardless, Zenith’s central forecast remains a soft-landing, which has largely transpired over the past 12 to 18 months.

“Our base case is a soft-landing, helping drive a rotation into other regions and market cap segments. If we see slower US growth and two to three rate cuts, we are likely to see further evidence of a global recovery,” he says.

“In an environment with a slightly weaker US dollar, emerging markets can do well, alongside Europe and Japan. We have already seen this broadening out over the past three months.”

Mr Hennessy says current lofty valuations are a minor factor in the short term, though are far more important when looking at returns over a 7–10-year horizon.

“If you were to look at valuations right now, you could reasonably argue that US equity returns over the next 7-10 years are likely to be in the very low single digits,” Mr Hennessy says.

“However, if the productivity surge materialises and corporate margins remain high, then US equity returns are more than likely going to be around 6-8 per cent.”

Mr Hennessy said geopolitical turbulence has been a key concern for markets since 2022, which is unlikely to change.

“Policy is polarised across countries and trading groups, and I don’t expect this to change any time soon.

“As investors, there’s little we can do other than continue to monitor situations as they unfold. This turbulence is one of the reasons why gold has firmed as an option for defensive assets other than bonds.”

On the US Dollar, Mr Hennessy challenged the view that the currency is on track for a major bear market.

“There was a consensus that it could go into a major bear market with a 20 per cent decline, but we aren’t of that view,” he says.

“The direction of the US dollar is critical for investors, particularly when making decisions about investing in emerging markets and whether to hedge currency exposure.

“It’s certainly at risk of some downside, but not to that extent.”

In terms of what could create headwinds in 2026, Hennessy highlighted two key risks: the Fed doesn’t cut rates, and AI-related corporate earnings and capex plans disappoint.

However, Zenith believes that although valuations are challenging in some markets and sectors, 2026 is shaping up as a year where a soft-landing should encourage investors to look beyond the US tech sector for opportunities in a broadening global market rally.

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Andrew Yap

A successful managed account portfolio must balance model outputs with professional judgement and insights, Andrew Yap head of portfolio solutions at Zenith Investment Partners says.

Mr Yap says while quantitative models provide an important input into the portfolio construction process, real-world insights are essential to navigate the uncertainties of the current market environment.

“Models give you the numbers, but they can’t always tell you how markets will behave. Human judgement and insights are what turns data into resilient portfolios that can withstand unexpected shocks, which is especially important in today’s environment,” Mr Yap says.

“Will it be a smooth ride, will we hit a recession, or is a sudden boom around the corner? This is where the experience and expertise of investment professionals make all the difference and can be what turns a good plan on paper into a resilient portfolio that can weather real-world storms.”

Zenith uses deep insights from its internal investment research team and asset allocation experts to apply qualitative insights to refine its customised portfolios to meet a broad range of client objectives.

“Our investment research team is an essential part of the process, as it’s critical that we ask what they are seeing from the coalface. They act as a valuable sounding board for the portfolio construction process to test active views and to aid in the selection of primary and back-up fund managers with confidence,” Mr Yap says.

“A managed account provider with access to contemporary insights can produce a more robust long-term outcome. They will consider current market intelligence including emerging trends, sector specific themes and the team’s high conviction views, which helps keep the chosen portfolios ahead of the curve.”

Mr Yap added that the need for qualitative judgment is even greater in less liquid investments such as private assets, and that the future of portfolio management lies in blending both data and deep professional insights.

“With private assets, we need to explain both the numbers and the story,” Mr Yap says.

“The data is powerful, but it has to be paired with a transparent conversation about the risks, the long-term commitment, and the importance of choosing the right manager.

“The future will be about weaving them together and giving us the confidence to stay calm when markets are shaky and the situation changes.”

Managed accounts have become a mainstream investment offering over the last decade as financial advisers and their clients realise their many benefits, including improved efficiency, scale and cost advantages. Zenith currently manages more than $6 billion in client assets across both customised and public menu managed account portfolios.

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Dugald Higgins

Investors are increasingly exploring private markets as traditional portfolios battle geopolitical and macroeconomic risks, according to Dugald Higgins, head of responsible investment and real assets at Zenith.

In a recent report, Mr Higgins says private equity, credit, real estate and infrastructure are now seen by regulators as structurally significant and vital for the future of capital markets.

“The growth of private-market strategies is accelerating rapidly. Significant capital is flowing in, and the strategic role these assets play in portfolio construction cannot be ignored,” Mr Higgins says.

“As public market volatility grows, private markets can provide the diversification and growth investors are seeking, but only for investors with the right risk profile.”

Once exclusive to large institutions, Mr Higgins says private markets are now more accessible via open-ended ‘evergreen’ funds. However, with significant growth resulting in over 450 funds in the Australian market, questions about liquidity should be at the forefront.

“Private assets are private for a reason – housing them in an open-ended fund does not create additional liquidity in the assets themselves. Natural liquidity stems from the underlying assets, not the fund structure.

“While the liquidity frameworks in open-ended funds are usually significantly more sophisticated today than in the past, liquidity crunches are not new. Fund freezes have been common in these strategies over the past 25 years.”

Mr Higgins says manager selection and operational execution are essential in unlocking the strategic value of private markets.

“Private asset investing requires expert portfolio construction, liquidity management tools, stress testing, and vigorous valuation frameworks,” Mr Higgins says.

“When applied thoughtfully, private markets offer diversification and the potential for strong long-term investment outcomes. But investors must seriously consider the liquidity constraints, manager skill and underlying governance of each opportunity.

“Investors should also consider how illiquidity impacts asset management, not just portfolio management. This is critical in real estate and infrastructure where operational assets need ongoing capital expenditure.”

Higgins says that while private markets can be compelling for those seeking to access assets which have many attractive aspects in a portfolio context, illiquidity is a defining feature and key driver of their characteristics.

“The full potential of private assets is often only realised within strategies designed for liquidity limits, so broader portfolio construction decisions are critical for optimal outcomes,” he said.

“As private markets products proliferate, transparency, governance and investor education are critical to avoid a repeat of the issues the sector has faced in the past.”

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