How to invest $1 million in 2026 | Mid-year update

Now and again, an event or development in markets lights a fire under Livewire readers. Labor's May budget update was one of those moments, and our coverage has received a strong response from readers who have expressed their views on its implications for their investment strategies.

When I sat down with Charlie Viola from Viola Private Wealth and Ben Clark from TMS Private Wealth for our mid-year update on How to Invest $1 million, I anticipated wholesale changes in how they're allocating capital.

And whilst both advisors are preparing for potential changes to how and when they use discretionary trusts, when it comes to the underlying investment strategy the movement is more gradual.

In this mid-year update, Ben and Charlie break down the latest regulatory and budget shifts, where they are allocating capital for their clients, and we also take a closer look at Aussie equities, which have lagged global shares.

Watch the full session or read a summary of the key points below.

Topics discussed

• 0:00 - Introduction
• 2:11 - Investment implications from proposed Budget changes
• 7:11 - Considerations around the use of Discretionary Trusts
• 8:20 - How Charlie Viola is investing for clients
• 13:51 - How Ben Clark is investing for clients
• 18:10 - The underwhelming performance of Australian Equities
• 24:53 - Breaking up with a fund manager

Budget reaction - a watch and plan approach

Both advisors are taking a prepare-and-watch approach to responding to the proposed tax changes to discretionary trusts, noting that waiting until we know exactly what changes will come through is critical.

There’s also unlikely to be a silver bullet or one-size-fits-all solution - which Viola says potentially sets the advice industry and its clients up for a busy, if not challenging, few years.

“We're just waiting to see what happens and we're waiting to see whether or not these changes actually become law. So nothing for the moment, but there is a whole world of hurt to come if it does happen,” says Viola.

Clark cautions against knee-jerk reactions in anticipation of the proposed changes and argues that taking drastic action before the rules around how discretionary trusts will be treated are set in stone can do more harm than good.

“I remember reading in the AFR about people pulling huge amounts of money out of super before the Div296 changes were legislated, which got significantly watered down, and there would've been some people making some pretty poor decisions. So I think Charlie's bang on in that don't do anything until these things are actually legislated and you know what the actual playing field looks like,” says Clark.

If you detect an air of apprehension, I think you are on the money, and there is also a sense that this unease is playing out in asset markets - perhaps most notably in property prices, which Clark says face an extended period of price discovery.

“I think it's going to be a year or two before we get our heads around what properties are now worth going forward. But I do think the rate of growth of property in the next decade is not going to be what it was in the last decade.”

Despite the recent removal of the 50% capital gains tax discount, Viola says his firm's process for selecting investments is unchanged.

"From an investment perspective, there's no change. It's not impacting how we're making investment decisions. So we're still allocating based on how we feel about global growth and domestic growth and what we think asset allocation should be."  

How Charlie Viola and Ben Clark are allocating capital in 2026

The tables below show updated asset allocation frameworks provided by Viola and Clark. The broad themes are an increasing allocation to global equities and a reduction in exposure to Australian equities.

Another theme is the continued growth in exposure to growth and defensive alternatives. These are typically private markets strategies that are becoming easier to access for a broader range of investors.

(You can access a deep dive on Private Markets with Ben Clark here)

Charlie Viola’s Asset Allocation

Key points

• Increasing allocation to global and trimming Australian exposure.
• Increasing exposure to defensive alternatives as more options become available. No exposure to long duration fixed income.
• Alternatives exposure is largely global - Viola highlights the high overall global exposure in the asset allocation.

“We've certainly got no duration in our portfolios. We think that that'll get smashed. In terms of the fixed income space, we're probably doing a little bit more global fixed income than we have ever done before. We've got access to better managers and better products, and our fixed-income portfolios are probably performing better than ever before."

Ben Clark’s Asset Allocation

Key points

• Reducing exposure to Australian equities and recycling dividends into global equity exposure.
• Letting global exposure grow on the back of strong performance.
• Increasing exposure to global infrastructure managers as opportunities on the ASX dwindle.

A reality check for Australian Equities?

In FY26, the S&P ASX 200 delivered a miserly 2%. That number looks better if you include dividends, but it still lags well behind the S&P 500's 20% return. As global markets continue the run of double-digit returns, investors would be forgiven for questioning the role of Australian shares.

Both Clark and Viola explain that whilst the local market might not be delivering high-octane growth, there remain several strong reasons to maintain a decent exposure to Australian shares.

While AI and tech are running hot, Viola says the ‘old world’ businesses that dominate the local market have stood the test of time. Throw in some reliable income, and that stability does play an important role in a portfolio.

“We are quite complementary to the rest of the world. We pay a little bit more income, and we're in that kind of old world economy where we're not so reliant on tech, healthcare, AI, all the new stuff,” he says.

There’s also the somewhat forgotten reality that volatility works both ways - those double-digit up years can quickly unwind.

“We all remember that 2022 was the last really nasty year that we had in global markets. I think the NASDAQ was down 34%. The S&P was down about 25%, and I think the Australian market was down about 9%. So the Australian market has lower growth, but it's lower volatility as well.”

Clark adds that the beauty of dividends is that they can’t be taken back. Unlike capital gains, which can be unwound at any moment, dividends are money in your pocket and can be reinvested into other growth opportunities.

If there is a key message to come from this discussion, it is to avoid making rash all-in or all-out decisions. With uncertainty around the taxation environment and the constant reality of shifting markets, both advisors advocate a deliberate, considered, and steady approach to capital allocation.