ECP urges defensive investing amid ‘muddied’ outlook

Binaya Dahal

Journalist

22 June 2026

ECP Asset Management has suggested investors “adopt a more defensive approach” ahead of the reporting season, as corporate Australia faces an uncertain outlook for the second half of 2026.

Andrew Dale, partner at the $2.3 billion Sydney-based fund manager, said businesses were grappling with heightened uncertainty as they prepare to provide indication of whether they will miss or beat forecasts, and outline expectations for the next 12 months.

“While it has been a gruelling six to 12 months in markets, with many winners and losers, the focus now is how companies will perform for the full financial year come June 30,” he said.

“The sense we are getting is that there is a lot of uncertainty. The waters are muddied.”

With inflation targets still under pressure, Dale said consumer sentiment has remained more resilient than many expected but believes households are beginning to change their behaviour.

He added they are reallocating expenditure across different categories and creating new winners and losers across the retail sector, rather than cutting spending outright.

“When you consider inflationary pressure – be it wages, energy, freight, and other general costs of doing business – you will see most companies communicate expectations of a more difficult outlook ahead, especially in the retail space,” Dale said.

He expects this dynamic to favour retailers such as JB Hi-Fi, given its resilient business model and ability to move in and out of different categories. But warned that furniture and homewares groups including Nick Scali and Temple & Webster could face a more difficult operating environment.

“The large supermarkets, such as Woolworths and Coles also tend to be a safe haven for investors given their dependable defensive positions, even though they will see some cost pressures coming through,” Dale said.

Although opportunities remain in some sectors, particularly technology and artificial intelligence through companies such as Megaport and TechnologyOne, Dale said caution should guide portfolio positioning in the second half of the year.

“Defensive is the way to play it leading into the back half of the year,” he said.