VanEck points out importance of “selectivity” in Aussie stocks

Yasmine Raso

Senior Journalist, Financial Newswire

28 January 2026

Opportunities abound in Australian equities in 2026 but “selectivity is key” for investors to look beyond index momentum and capitalise on stronger and more resilient stocks given ongoing volatile conditions, according to exchange traded fund (ETF) specialist VanEck.

A perfect storm of lifting inflation, “looming” rate hikes, stretched valuations and “apparent unwind” in the large cap space has seen the baton pass from ‘index darlings’ such as CSL and Wisetech – that essentially dragged down their entire sector due to underperformance – to more calculated opportunities underpinned by change-driven demand, such as the global energy transition and appetite for gold.

VanEck Asia Pacific chief executive and Managing Director, Arian Neiron, said mid and small caps are well-positioned to outperform in 2026, given large cap valuations remain stretched near the upper end of their 10-year historical range.

“Large-cap Australian equities entered last year trading near the upper end of their historical valuation ranges, and as earnings growth expectations softened, that left little margin for disappointment,” he said.

“The result was that weakness in a small number of heavily weighted stocks had an outsized impact on index performance, despite more resilient conditions elsewhere in the market.”

As markets have moved quickly to price in two rate hikes this year after last week’s jobs figures surprised to the upside, Neiron said companies with inflation-linked revenues and pricing power are likely to prove their resilience in such favourable conditions this year. He also pointed to the opportunities in industrials and critical minerals, as the consumer discretionary sector traverses underperformance given its vulnerability to “margin compression amid continual discounting”.

“Currently the [VanEck Australian Long Short Complex ETF’s] portfolio is long Transurban Group which has experienced recent share price weakness, creating a more attractive entry point into a business with high-quality, long-duration infrastructure assets,” Neiron said.