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Equitable Investors

May 2026

(2-minute read)

Funds operated by this manager:

Equitable Investors Dragonfly Fund

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Past performance is not a reliable indicator of future performance. Fund returns are quoted net of all fees, expenses and accrued performance fees. Delivery of this report to a recipient should not be relied on as a representation that there has been no change since the preparation date in the affairs or financial condition of the Fund or the Trustee; or that the information contained in this report remains accurate or complete at any time after the preparation date. Equitable Investors Pty Ltd (EI) does not guarantee or make any representation or warranty as to the accuracy or completeness of the information in this report. To the extent permitted by law, EI disclaims all liability that may otherwise arise due to any information in this report being inaccurate or information being omitted. This report does not take into account the particular investment objectives, financial situation and needs of potential investors. Before making a decision to invest in the Fund the recipient should obtain professional advice. This report does not purport to contain all the information that the recipient may require to evaluate a possible investment in the Fund. The recipient should conduct their own independent analysis of the Fund and refer to the current Information Memorandum, which is available from EI.

Hedge Clippings | 22 May 2026

The 2026 Budget may come to be remembered less for its promised "fairness" than for the investment shock it has unleashed.

Labor's changes to negative gearing and capital gains tax are being sold as a rebalance in favour of younger Australians.

The political risk for Albanese and Chalmers is that they want to make it look like a targeted hit on the very wealthy, and older, asset rich, boomers. In reality, it is a broader attack on investment, property ownership and household balance sheets across a much wider demographic.

For the property market, the early signs are not encouraging. Macquarie has reportedly stopped factoring negative gearing into some serviceability calculations, and Westpac has told brokers that some investor's loan pre-approvals will need reassessment. Once banks begin changing lending assumptions, policy theory quickly becomes market reality.

The danger is not simply that investor demand weakens. It is that prices fall into an already fragile housing market. Morgan Stanley has reportedly warned of a 5-10% national house-price correction, with some analysts pointing to sharper risks in Sydney and Melbourne.

That may sound like good news for first-home buyers. But falling prices are not costless. Recent buyers with high loan-to-value ratios are most exposed. The RBA has previously warned that negative equity makes borrowers and lenders more vulnerable, because a stressed borrower may be unable to repay the loan even by selling the property.

The housing market is not the share market, and home loans do not operate like margin loans. But the feedback loop can still be brutal: weaker sentiment, tighter credit, fewer buyers, forced sales, lower prices, and then even tighter credit.

What makes the current environment particularly dangerous is that the pressure points are no longer confined to one part of the economy.

The Budget has not only shaken confidence in residential property investment. It has also fundamentally altered the tax landscape for equities, private investment and small business. At the very moment the government should arguably be encouraging investment and risk-taking, it has instead introduced a level of policy uncertainty that is causing both investors and lenders to reassess their appetite for risk.

Meanwhile, inflation is proving far more stubborn than Canberra anticipated. To be fair to the government, a large part of the latest inflation shock is external. The RBA now expects headline inflation to peak at 4.8% in mid-2026, with underlying inflation remaining above the top of its target band until at least mid-2027.

Consumer sentiment has already deteriorated sharply. The latest Westpac-Melbourne Institute survey reportedly fell 12.5% in April to levels not seen since the pandemic, while NAB business confidence suffered one of its steepest monthly falls in decades.

And now the labour market is beginning to crack.

Australia's unemployment rate rose to 4.5% in April - the highest level since November 2021 - after employment unexpectedly fell by almost 19,000 jobs. Economists are increasingly describing the labour market as "softening", with hiring intentions weakening under the combined weight of higher borrowing costs, weaker consumer demand and growing uncertainty.

The result is a deeply uncomfortable combination: slowing growth, weakening confidence, and persistent inflation.

Which brings us to the question nobody in Canberra wants to answer or us to ask:

How close are we to recession? The margin for error is narrowing rapidly.

The RBA itself has acknowledged that each successive rate rise increases recession risk. Under its more adverse scenarios, unemployment could rise above 5% and economic growth could slow to levels consistent with recession.

At a time when confidence was already fragile, Chalmers chose to target the very areas most sensitive to confidence and leverage - housing, investment and small business - which drive the economy. The government may have hoped voters would see "fairness" - odd from a government that broke explicit pre-election promises.

And this is where the Budget may prove both economically damaging for all, and for the government, politically catastrophic. For the past year Albanese has appeared untouchable. Today, the parallels with Bill Shorten's franking credits debacle prior to the 2019 election are becoming harder to ignore.

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Janus Henderson Investors

May 2026

(Duration: 29 minutes)

Funds operated by this manager:

Janus Henderson Australian Fixed Interest Fund , Janus Henderson Conservative Fixed Interest Fund , Janus Henderson Diversified Credit Fund , Janus Henderson Global Natural Resources Fund , Janus Henderson Tactical Income Fund , Janus Henderson Australian Fixed Interest Fund - Institutional , Janus Henderson Conservative Fixed Interest Fund - Institutional , Janus Henderson Cash Fund - Institutional , Janus Henderson Global Multi-Strategy Fund , Janus Henderson Global Sustainable Equity Fund , Janus Henderson Sustainable Credit Fund

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