Key Takeaways

  • Small cap markets experienced a difficult quarter, with significant divergence between sectors, as small industrials declined sharply while resources remained relatively resilient.
  • The fund performed broadly in line with the market despite a structural underweight to resources, which has been a headwind in recent periods.
  • The investment approach remains focused on identifying quality businesses with durable competitive advantages and purchasing them at a discount to intrinsic value.
  • Resource companies are typically underweighted due to their cyclical nature, limited scalability and less predictable earnings profiles, particularly in the small cap segment.
  • Reporting season highlighted both strong performers, such as Joyce Corporation, and short-term share price volatility in companies like Guzman y Gomez despite solid fundamentals.
  • Portfolio positioning remains focused on resilient, quality businesses with strong balance sheets, rather than attempting to predict macroeconomic or geopolitical outcomes.