ASX shares and global equities both delivered great returns for investors over the Australian 2025 financial year period.
But ultimately, our international counterparts did better.
Using the MSCI All-World Price Index as our proxy for global equities, let's take a look at the recent history.
The MSCI All-World Price Index increased by 14.65% over the 12 months to 30 June this year. The S&P/ASX 200 Index (ASX: XJO) rose 9.97%.
Over the FY24 period, the MSCI All-World Price Index gained 18.37% while ASX 200 shares lifted 7.49%.
In FY23, the MSCI All-World Price Index went up 16.51% while ASX 200 shares increased by 9.67%.
FY22 was the last financial year period in which the ASX 200 did better than the MSCI All-World Price Index — however, both indices fell.
In FY22, the MSCI All-World Price Index tumbled 15.61% while ASX 200 shares were more resilient by comparison, falling 10.19%.
Is the trend in global equities outperforming Aussie stocks set to continue?
Or is the tide turning in FY26?
Last month, the MSCI All-World Price Index rose 2.1% while ASX 200 shares did slightly better, gaining 2.3%.
Let's see what an expert has to say.
Image source: Getty Images
Will ASX shares beat global equities in FY26?
Betashares chief economist David Bassanese says it's unlikely that ASX shares will outperform global stocks this year.
In a new article, Bassanese says the valuation of ASX 200 shares and global equities are both "above average".
He said the ASX 200 is trading on a higher price-to-forward earnings (P/E) ratio than global equities.
The ASX 200 P/E is currently 19.4x, while the MSCI All-World Price Index P/E is 18.9x.
Bassanese explains:
That said, Australian valuations have tended to average close to global valuations over the past decade or so and, with the global market on a P/E ratio of 18.9, Australian shares are neither overly expensive nor cheap by global standards.
Current earnings expectations imply 6.4% growth in Australian forward earnings by mid-2026, which is less than the 11.6% expected for the overall global market.
What's more, Australian earnings expectations remain under downward pressure.
Accordingly, Australian equities still seem likely to underperform global equities over the coming year.
Bassanese said continued market gains are still possible for global equities, provided bond yields don't rise too much and/or the current bullish outlook for earnings doesn't change.
He added:
The relative performance of local over global bonds remains in a choppy sideways range.
The outlook for local versus global bonds remains relatively neutral.
In terms of interest rates, Bassanese said the market still expects three rate cuts in Australia by the end of 2026.
In the US, the market expects four interest rate cuts by the end of next year.
Further reading
Here is the outlook for ASX shares vs. property investment in FY26.
