The ASX 200 finished 16th of 20 major stock indices in FY26 - here's where you should have invested instead

The Socceroos are more than holding their own on the global stage at the World Cup, but unfortunately the same can't be said for the Australian stock market. 

FY26 has come to an end and it's been another poor showing from the ASX 200. The bourse managed a meagre 0.6% in the first half of 2026, and a 12-month return of 2.7%.

Even if you include dividends, the picture isn't much brighter. The S&P/ASX 200 Net Total Return (XNT) index has returned 2% in 2026, and 5.7% over the last 12 months. 

In fact, of the 20 major stock markets with a total market capitalisation of at least US$1 trillion, the ASX 200 came in 16th place for FY26.

Any investor looking to invest on 1 July 2025 would have likely been better off picking a random global stock market out of hat than putting it in the ASX. 

As my Market Index colleague Kerry Sun wrote of FY26, "let's be real, it was a terrible time to be an Australian index investor."

It could have been even worse. The ASX 200 would have been well in the red were it not for its Materials sector, which returned 47% in FY26. 

And what compounds the misery is the obvious opportunity cost of investing in the ASX once you look further afield. 

FY26 was an amazing year for equities returns, you just had to be looking outside Australia, as you can see from the table below. 

Global stock index returns for FY26

Nine of the world's 20 biggest stock markets recorded 12-month returns above 20%, with the 10th, the UK, falling just short. And that's a stock market known for its anaemic growth. 

Four Asian indices top the list, with the best of them, South Korea, returning a staggering 178% over 12 months. To force a darts analogy, betting on the ASX 200 was like hitting a 5 when triple 20 was right next door. 

As I wrote six months ago after the ASX 200 finished second last of 24 major indices in 2025:

"Australian investors are effectively leaving money on the table with their loyalty to the ASX. And given how over-exposed the average Australian is by default to the Australian economy through their housing, superannuation and employment, global exposure shouldn't be a nice-to-have but a necessity."

Despite this, 58% of Australian investors only hold ASX stocks, according to the most recent ASX Australian Investor Study. Only 16% also hold global stocks. 

With the plethora of accessible ETFs and funds now offering global equities exposure, there's really no excuse not to at least consider international stock indices.

For example, the Vanguard MSCI Index International Shares (AUD Hedged) ETF, which tracks the world's largest companies, excluding Australia, returned 19.7% in FY26. 

The ASX 200 total return was 5.7%. I know which return I'd prefer. 

Thankfully there was one silver lining to the ASX's FY26 performance. We did manage to beat New Zealand, which returned -11.9% over that 12-month period. 

So it could be worse - we could be the Kiwis.