Why the RBA’s hold favours a broader approach to ASX investing

While inflation continues to move lower, the Board made clear that it is not yet prepared to declare victory. Policymakers acknowledged signs of slowing growth but remain cautious about lingering inflation pressures and an uncertain global backdrop. The Board also made clear that it remains prepared to raise rates again if inflation does not continue to ease.

For investors, that means the conversation is shifting. Markets are no longer debating whether rates need to rise further. They are debating how long policy remains restrictive, what that means for earnings and whether the winners of the rate-hiking cycle can continue to dominate. That leaves an uncomfortable mix of slowing growth, lingering inflation pressures and a share market that has become increasingly reliant on a small number of companies.

When crowded trades meet uncertainty

The market's most crowded positions were built over a period in which investors rewarded scale, earnings resilience and dependable income. Investors are now confronting a more uncertain environment, where those tailwinds can no longer be taken for granted.

That uncertainty matters because much of the market's recent performance has been driven by a relatively small group of stocks. Today, the top 10 companies account for almost half (49.1%, as at 31 May 2026) of the ASX 200, leaving many portfolios more concentrated than investors may realise. As the table below shows, historically, periods of elevated concentration (such as right now) have often been followed by broader participation across the market, creating opportunities beyond the largest companies.

Table: How MVW’s Index has historically performed at different levels of market concentration

Source: MarketVector, S&P, FactSet. Monthly observations from February 2006 to the end of May 2026. Historical relationships shown are illustrative only and should not be relied upon as a forecast of future outcomes. Past performance is not indicative of future performance. MVW Index is the MVIS Australia Equal Weight Index. You cannot invest in an index.

In periods like these, the VanEck Australian Equal Weight ETF (ASX: MVW) takes a different approach from traditional Australian equity funds. Instead of allocating more capital to larger companies, it gives each company the same weight.

That means less reliance on a handful of large companies and broader exposure across the Australian market.

The RBA's decision did not change the investment landscape overnight. It did reinforce a reality that investors may have overlooked: Australian equity portfolios are entering a more uncertain period with some of the highest concentration levels seen in decades. After a long period in which concentration has been rewarded, investors may want to consider whether their portfolios are prepared for a market in which opportunities become more broadly distributed.

Key benefits

Core Australian equity strategy

An award winning Australian equity strategy backed by significant research investing in the largest and most liquid Australian listed companies.

Diversification across companies and sectors

A portfolio which offers true diversification by equally weighting across companies and reducing sector concentration.

Outperformance potential

Equally weighting has been shown to produce long-term outperformance compared to a market capitalisation approach.

Key risks

An investment in the ETFs carries risks. For MVW these include risks associated with financial markets generally, individual company management, industry sectors, fund operations and tracking an index. See the relevant PDS and TMD for details.