As global equites flirt with record highs and investors shrug off the unpredictable nature of US President Donald Trump’s trade policies, local fund managers are banking on interest rate cuts to push the smaller end of the sharemarket even higher.
The Reserve Bank of Australia has already cut the cash rate twice this year to 3.85 per cent, with at least two more tipped by Christmas. Hopes for further easing, along with a trade truce between the US and China, propelled the S&P/ASX 200 Index to a fresh high on Wednesday.
While the S&P/Small Ordinaries index is still trading about 10 per cent away from its 2021 peak, the gauge has still jumped 18 per cent from its recent low in April as investors piled back into the sharemarket.
Speaking at the Morgan Stanley Summit in Sydney this week, fund managers from Ausbil, Wilson Asset Management, and Perpetual named their stock small caps picks.
Arden Jennings, a portfolio manager at Ausbil, named Generation Development Group, which provides specialist financial products, and has already rocketed more than 60 per cent on the ASX this year.
“As we know, in small caps, it’s part art and part science, and we like people-focused businesses,” said Jennings, who has been tracking the stock for almost a year.
Source: https://www.afr.com/markets/equity-markets/three-small-cap-stocks-that-fundies-tip-are-on-the-rise-20250611-p5m6ol