Emanuel Datt
Geopolitical risks remain high, but markets have so far shown resilience, supported by low unemployment and strong liquidity conditions, providing opportunities for investors that know where to look, according to Emanuel Datt, chief investment officer at boutique Australian equity investment manager Datt Capital.
“For investors, the question is clear: how do you position portfolios when the economic picture is neither boom nor bust, but something more nuanced,” Datt said.
Australian equities may have pushed towards record nominal highs, but when adjusted for inflation, the market still sits about 15 per cent below its 2007 peak. Datt said this anomaly becomes even more striking when comparing small-cap valuations to large‑caps.
“Small cap earnings multiples remain at a material discount to large caps, something highly unusual historically,” Datt said.
Technology and gold stocks may be positioned particularly well in the current environment. Datt said that rather than chasing speculative AI stocks, it was better to look for companies positioned to benefit from the adoption of AI, such as those reducing operational costs through automation.
“With ongoing currency debasement and stimulus settings, gold continues to serve as a reliable store of value in uncertain times. Critical metals, driven by demand for robotics and advanced manufacturing, are another area of interest,” Datt said.
A small cap stock that Datt Capital has recently bought into is fertility services provider Monash IVF. The fund manager believes that despite recent operational challenges, the board has stepped in appropriately.
“We saw Monash IVF as a market leader in a defensive sector with strong demographic tailwinds. The board’s decisive action and the opportunity to invest at a significant discount reinforced our conviction in its long-term potential,” Datt said.
