FY26, the Year of the Beaten Favourite

Last reviewed: June 2026

The ASX 200 finished FY26 up around 3.2%. Sounds fine on a spreadsheet. But it felt like ten rounds with Mike Tyson if you owned the wrong stocks.

And if concentration in yesterday's darlings were the body blows, the budget was the knockout punch. FY27 is genuinely going to start with some serious reflection on portfolio strategy for a lot of people.

FY26 was the year of the beaten favourite. The names that sat untouched in model portfolios and SMSFs for a decade got absolutely hammered. CSL went from $240 to $115. Cochlear dropped 60%. WiseTech fell 70%. These were the "quality compounders" everyone told you to buy and hold forever. And forever turned out to be a very long time when you're watching your position halve.

Meanwhile, metals and mining did all the work. The sector surged around 52% as an industry group while most of the market trod water or went backwards. BHP cleared 60%, Lynas topped 110% at points, Macmahon ran hard. Iron ore, gold and critical minerals powered the move. Financials held their big index weight and kept the headline number from turning negative, but beyond that? Painful in patches is being generous.

The difference between outperformance and getting whacked was marginal. Sector selection decided outcomes in FY26 — the gap between the best and worst performers in the 200 exceeded 470 percentage points. Read that again.

We're going to break down exactly what happened, which sectors won and lost, the individual names that moved most, and what it all means heading into FY27.

How did the ASX 200 actually perform in FY26?

The S&P/ASX 200 (XJO) returned approximately +3.2% for the financial year, closing around 8,823 on 30 June 2026. Calendar year-to-date 2026 was even quieter at roughly +1.2%. The long-run average for the ASX 200 including dividends is around 8.3% per annum. So FY26 was well below trend on price.

But that +3.2% is one of the most misleading numbers you'll see this year. One sector — Materials, around 25% of the index by weight — did almost all the heavy lifting. Financials at 32% provided the ballast. Everything else? Patchy at best. Catastrophic in a few pockets.

ASX 200 Metric	FY26 Result
Price return (XJO)	+3.2%
Calendar YTD 2026	+1.2%
Closing level (30 June)	approx. 8,823
Best sector	Materials (Metals & Mining +52%)
Worst sector	Healthcare
Largest single stock drag	WiseTech Global (WTC, -70%)

A market being dragged in two directions at once. And for most diversified portfolios, the net effect was pretty underwhelming. For concentrated ones, it was worse than that.

Which sectors won FY26, and which ones got hammered?

Materials: the clear winner

Resources did all the heavy lifting this year. Not some of it. All of it. The Metals and Mining industry group gained around 52% over twelve months — a staggering number for a grouping with a combined market cap north of $678 billion.

Everything that comes out of the ground caught a bid. Iron ore kept the big boys honest — BHP cleared 60%, Rio Tinto posted strong double-digit gains. Gold was on a tear globally, and names like Evolution Mining and Capricorn Metals ran with it. Lynas Rare Earths topped 110% at one point, riding the critical minerals thematic we've been banging on about for a while now.

Lithium names rebounded from their earlier cyclical lows. The contractor space was a major beneficiary too, with Macmahon Holdings up around 210% over the year — when the mines are busy, the people who build and run them get paid. The rest of Materials? Construction materials, chemicals, packaging — basically background noise. This was a Metals and Mining story, full stop.

Financials: the quiet ballast

At roughly 32% of the ASX 200, Financials is the single largest sector. And in FY26 it did what you needed it to do — held the line. The big four banks were resilient, posting modest positive returns and keeping the index from tipping negative while healthcare was cratering. Macquarie was generally stronger than the pure-play banks through the year.

No fireworks. But when a third of your index holds up, that matters more than people give it credit for.

Healthcare: the disaster

This is where the real damage happened. Not because healthcare is a small weight in the index, but because CSL and Cochlear were the stocks you didn't sell. The untouchables. The ones your adviser told you were quality compounders that would grow forever. And forever turned out to be a very long time when you're watching your position halve.

CSL fell 52%, from $240.51 in July 2025 to $115.09 at the close of June 2026. A stock that went from being a $120 billion company to roughly half that in twelve months. Cochlear was even worse in percentage terms, dropping around 60%, from above $300 to the low $120s.

Both faced valuation compression after years of premium pricing, combined with broader global healthcare de-rating. For portfolios that were overweight these names — and a lot of Australian SMSF portfolios were — the damage was severe. But we're starting to see green shoots of recovery in parts of the healthcare sector now, and that's worth paying attention to heading into FY27.

Technology: two completely different stories

Tech is a small sector on the ASX — only about 2.8% of the 200 by weight. But the dispersion inside it was wild. WiseTech Global lost 70% of its value, going from $109 to $33. A market darling, top-20 constituent at one point, systematically destroyed over twelve months.

On the flip side, names like Weebit Nano gained around 380%. Three hundred and eighty percent. That kind of number makes the sector average look vaguely respectable when it was really a tale of two extremes. And we're seeing green shoots in the beaten-down SaaS names too — not a screaming buy, but the worst of the de-rating looks to be passing.

Net effect on the index? Not much. The sector's too small to move the needle either way.

What were the biggest individual stock moves in FY26?

That +3.2% headline hides some truly eye-watering individual moves. We've pulled the most notable large-cap laggards below — the names that sat in real portfolios and did real damage.

Stock	Ticker	Approx. 1-Year Return	Sector
WiseTech Global	WTC	-70.0%	Information Technology
Cochlear	COH	-59.8%	Healthcare
CSL	CSL	-52.1%	Healthcare
Lendlease	LLC	-40.2%	Real Estate
Treasury Wine Estates	TWE	-38.6%	Consumer Discretionary
JB Hi-Fi	JBH	-26.7%	Consumer Discretionary

On the winners side, a lot of the biggest percentage gainers were smaller-cap miners or high-beta names that ran hard from depressed bases. BHP's 62% gain stands out because of the sheer market cap involved — it moved the index. Names like Weebit Nano and 4DMedical had eye-catching returns but are small enough that they didn't shift the overall number.

The losers table tells the more important portfolio story though. These are the stocks that sat in real portfolios. CSL alone probably accounted for more wealth destruction across Australian self-managed super funds than any single stock in recent memory.

What drove the Materials sector rally in FY26?

We've been saying for a while that resources were underappreciated, and FY26 basically confirmed the thesis. The Metals and Mining industry group gained around 52% over the year — a massive move for a $678 billion grouping that doesn't exactly sneak up on you.

Iron ore stayed supportive for most of the year, which meant BHP, Rio Tinto, and Fortescue all had strong operational years. Gold prices were elevated globally, lifting local producers like Evolution Mining, Newmont's ASX-listed presence, and Capricorn Metals. The critical minerals thematic — rare earths and lithium in particular — caught a serious bid after being beaten up in prior periods. Lynas was a major beneficiary of that shift.

And the contractor space ran hard. Macmahon, which benefits from increased mining activity without bearing commodity price risk directly, had a massive year. When the mines are busy, the people who build and run them get paid.

Construction materials, chemicals, paper and packaging? Did next to nothing. This wasn't a broad-based Materials rally. It was a Metals and Mining rally, and that distinction matters for how you position going forward.

Why did healthcare stocks collapse?

The easy answer is they were too expensive. CSL and Cochlear had traded on premium multiples for years, justified by consistent earnings growth and the "quality compounder" narrative. When that growth slowed, or when the market decided the premium wasn't warranted anymore, the de-rating was savage.

But there was more to it. Global healthcare faced headwinds across multiple fronts. Cochlear's drop from above $300 to the low $120s reflects sector-wide pressure on medical device companies and stock-specific issues. CSL's slide from $240 to $115 had the plasma business normalisation post-Covid, competitive pressures, and a broader rotation out of defensive growth names all working against it at once.

What caught people off guard was the speed. These weren't gradual declines — both stocks had multi-month stretches of sustained selling. Cochlear lost almost half its value between February and April 2026 alone. When the market decides a premium is gone, it doesn't wait around.

What should investors take away from FY26 heading into FY27?

Heading into FY27, the structural bid under resources still looks intact. But commodities cycle — they always have, always will — and the question now is whether iron ore, gold and the critical minerals theme have more to give, or whether last year's heroes become this year's casualties.

On the flip side, the beaten names are cheaper. CSL at $115 is a very different proposition to CSL at $240. We're starting to see green shoots in healthcare and some of the beaten-down SaaS names. "Cheaper" isn't the same as "cheap," and we'd want to see earnings trajectories stabilise before getting properly excited. But the setup is shifting.

The ASX 200 at +3.2% tells you very little about what actually happened underneath. This was a year where sector selection mattered more than stock picking, and the gap between getting it right and getting it wrong was enormous. A broadly diversified ETF approach would have given you the index return, which wasn't terrible. But active positioning toward resources and away from healthcare would have made a transformative difference.

That can be a positive if you approach it right. Our clients have embraced a new style of investing through structured products and have ventured into the big wide world of global stocks, which buffered what was otherwise a difficult year on the domestic market. Diversification across sectors, across asset classes, and across geographies isn't boring — it's survival. FY26 proved that in the most painful way possible for anyone who was concentrated.

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