More than 60 percent of advisers were bullish or very bullish on Australian small caps over the coming six months. This sentiment was also reflected in global small caps (57%) and emerging markets (53%).

In global equities, 44 percent of advisers identified technology as offering the best sector opportunities, while 30 percent of advisers favoured resources in the local market.

Evan Reedman, General Manager of Affiliates at Fidante, noted that while 68 percent of advisers still expect large-cap Australian equities to continue to perform strongly in the next six months, they were increasingly seeking opportunities beyond traditional equity exposures, driven by broader market uncertainty and high valuations.

“Large cap equities remain the ‘engine room’ for portfolio returns, but our survey revealed a clear focus among advisers on increasing satellite allocations in both Australian and global small caps,” Mr Reedman said.

Anticipating outperformance, the research showed advisers plan to significantly increase allocations to Australian small caps (44%) and global small caps (42%). Yet a more risk-aware approach was reflected in emerging markets, with only 23 percent of advisers planning to increase client allocations to the sector.

“Small caps have performed well, have historically offered a return premium, and can help to reduce concentration risk. In emerging markets, the story is more nuanced,” Mr Reedman said.

“Emerging market valuations are extremely attractive and recent performance has been strong. However, the associated risks are elevated. While opportunities vary across markets, current geopolitical tensions relating to China have contributed to a cautious approach among advisers.

“The current sentiment clearly highlights the need for an active, specialist approach to exploring opportunities in this asset class.”

Advisers diversify beyond equities

High valuations were the primary concern in both local and global equity markets. Almost 40 percent of advisers noted valuation concerns in Australian equities, while valuations overtook Trump as the primary concern in global markets (30%).

“Interestingly, concerns surrounding the Trump administration have more than halved since reaching fever pitch when we last surveyed advisers in April,” Mr Reedman said. “However, we are still seeing this dynamic play out. This includes rising concerns over inflation risk in global equities, driven by tariffs and Trump’s pressure on the Fed to cut rates, which may pose a notable threat to global markets.”

To combat these mounting concerns, advisers are looking beyond equities to deliver alpha for their clients. Today, 77 percent of advisers allocate up to 10 percent of client portfolios to alternative assets.

Infrastructure (21%), private credit (17%), and private equity (16%) were the key beneficiaries of this trend. Perhaps surprisingly, only 10 percent of advisers planned to allocate to commodities in the coming six months, despite gold reaching record highs.

“We are seeing strong demand for alternative assets that offer defence and diversification from traditional asset classes. We expect this to continue as more advisers and investors realise the power of unlocking alternatives in portfolios,” Mr Reedman said.

“Rightly, advisers are exercising caution when exploring this asset class, balancing risks, such as liquidity, against the return premiums on offer. A focus on governance and due diligence is also driving demand to well-established managers who have a proven track record across market cycles.”

Read the research.

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Victor Rodriguez

Global investment management firm, Fidante, part of Challenger Limited, has announced a new strategic partnership with London-based Fulcrum Asset Management (Fulcrum), acquiring a substantial minority stake and securing exclusive distribution rights across Australia, New Zealand, and Asia.

Fulcrum, founded in 2004, manages GBP6.2 billion^[1] (A$12.6 billion^[2]) and is primarily a liquid alternatives manager specialising in macro (discretionary and quantitative) strategies, while also offering illiquid alternatives in the UK pension market.

The partnership marks Fidante’s second affiliate addition in 2025, after it welcomed System Capital in February, and underscores Fidante’s ambition to build a leading alternatives capability.

Challenger Chief Executive, Funds Management, Victor Rodriguez, said the partnership strengthens Fidante’s growth strategy by expanding its alternatives offering at a time of rising client demand.

“We are excited to be partnering with Fulcrum, a firm with a long and successful track record in macro strategies. Their expertise is a compelling addition to Fidante’s affiliate network and creates new opportunities for investors seeking world-class alternatives.”

Fulcrum’s heritage is in macro strategies with research at the core of its approach. The firm offers three principal capabilities – discretionary strategies, alternative solutions, and quantitative strategies – each underpinned by innovation and a disciplined investment process.

Fulcrum Managing Partner, Joe Davidson, said the strategic partnership provides the firm with a strong platform for growth in Asia-Pacific.

“We are delighted to enter into a formal partnership with Fidante. There is strong alignment between the culture and aspirations of both firms, and we are excited to work with Fidante to broaden access to our strategies for Australian and Asian investors.

“Fulcrum will remain an independent partnership and, as a partner-owned firm, we’re committed to growing our business while delivering long-term results for clients,” Mr Davidson said.

Fidante has 19 leading investment managers as part of its multi-affiliate model, spanning fixed income, equities, and various alternative strategies.

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Notes:
[1] As at 30 September 2025.
[2] Based on an GBP/AUD exchange rate of 2.0332 as at 30 September 2025.

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The survey of 174 financial advisers^[1] conducted in April during heightened volatility following President Trump’s tariff announcements, reveals that four in 10 advisers are now bearish on both US equities (44%) and Australian equities (39%).

Views were split on what would come next: one in three (31%) expected the Australian and US share market to bounce back within six months, while 29% expected markets to fall further, and 26% expected it to stay about the same.

Since the survey was conducted, global markets have rebounded, with indices such as the Nasdaq now trading above pre-announcement levels following a pause in US-China tariff escalation.

Evan Reedman, General Manager, Fidante Affiliates, said the survey captures how financial advisers responded in real-time to the sharp and unexpected shift in market sentiment.

“The markets reacted strongly to the US tariff announcements, triggering sharp swings in investor sentiment both globally and locally,” Mr Reedman said. “This was an unexpected jolt, but advisers largely stayed the course with the majority expecting client allocations to Australian and US equities to remain steady as they assessed how volatility would play out.”

“Markets have since rebounded and this instinct to remain disciplined has proven correct. It reinforces the value of financial advice in helping investors navigate market uncertainty and to ensure their portfolios are protected across market cycles.”

In November 2024, Fidante’s inaugural Adviser Markets Survey found advisers were most concerned about high equity valuations and inflation. In the latest edition, those fears have been overtaken, with one in two advisers (50%) ranking Trump’s economic policies and tariffs as their main top concern today.

Advisers searching for alternative sources of alpha

Over the past 12 months, the US equity market has been favoured by investors, delivering out-sized returns, driven largely by the strong performance of the ‘Magnificent 7’ tech stocks. As the market corrects, and the US loses some of its lustre, advisers are looking to alternate sources of alpha to drive returns in 2025.

In the next six months, one in three advisers plan to increase allocations to global equity small caps (32%), while a similar proportion are looking to increase their exposure to emerging markets equities (31%), and Australian equity small caps (30%).

Alternative assets are also high on the radar, with advisers looking to increase allocation to infrastructure (29%), private equity (22%), and private credit (21%).

“While following the crowd and investing in the big US tech stocks has driven outsized returns for investors in recent years, looking ahead more active sector and stock selection is going to come to the fore,” Mr Reedman said.

“It is likely global macroeconomic and geopolitical tensions will continue and for investors that means navigating a period of ongoing uncertainty and volatility. Advisers have been quick to look further afield for pockets of opportunities – such as emerging markets, small caps, and private markets – that can provide both diversification and alpha to a client’s portfolio.”

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[1] Fidante Adviser Markets Survey completed by 174 financial advisers between 1 April – 15 April 2025.

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System Capital is a global long-short manager founded in 2022 by well-regarded Portfolio Manager, Lev Margolin. The strategy is well suited to family offices, High-Net-Worth investors, and retail clients.

Typical of Fidante’s affiliate model, Fidante has taken a substantial minority equity stake in System Capital and entered into an exclusive distribution agreement.

The System Capital Long/Short Fund is a global concentrated strategy focused on identifying pricing inefficiencies between the valuation of a business and its business quality. The Fund employs detailed, bottom-up fundamental research to identify companies with strong and growing cashflows over the medium term with a strengthening competitive position.

The Fund’s absolute return focus also means the Fund can benefit from situations where a structural position of a business is weakening and that is not yet reflected in valuation, as well as adjust the Fund’s market exposure (net long) to protect the portfolio from market dislocations. The aim is to achieve consistent absolute returns and greater downside protection for investors.

The partnership will allow System Capital to scale and grow FUM, while strengthening Fidante’s multi-affiliate proposition and suite of investment choices.

Fidante now boasts 20 leading investment managers as part of its multi-affiliate model, spanning fixed income, equities, and various alternative strategies including System Capital.

Commenting on the partnership, Victor Rodriguez, Chief Executive, Funds Management at Challenger said specialist, active managers come to the fore in times of increasing market volatility and uncertainty.

“We are excited to be partnering with System Capital,” Mr Rodriguez said. “We believe Lev Margolin’s expertise in long-short investing, combined with the extensive experience of the System Capital team, presents a unique opportunity for Australian investors looking to take advantage of under and overvalued global stocks.”

“At Fidante, we strongly believe in the value of active management and the distinct advantages specialist, independent managers offer in an increasingly competitive market. We are committed to ensuring investors have access to best-in-class, active fund managers, across a wide and diverse range of products and capabilities,” Mr Rodriguez said.

Why global long-short

Commenting on its investment strategy, Mr Margolin said System Capital is looking to deliver consistent absolute returns in a world experiencing record change and transition.

“Our Fund is not constructed with a specific investment thematic or qualitative overlay. Rather, we look to take advantage of structural winners and losers within specific industries to deliver absolute returns,” Mr Margolin said.

Since inception in October 2022, the Fund has returned 24.3% p.a. (before fees) as at December 2024.

“We see our partnership with Fidante as a natural evolution of our business,” Mr Margolin said. “It brings a new and differentiated investment strategy to the Fidante stable and allows us to grow our investor base.”

“Our business remains majority-owned by our team, and we will continue to reinvest in the growth of the business.”

Fidante is a global investment management business with approximately A$100bn in FUM*. Fidante provides investors with access to best-in-class investment managers. They are one of Australia’s largest active investors, offering compelling strategies across equities, fixed income, and alternative assets, via partnerships with leading investment teams.

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* As at June 2024

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Victor Rodriguez

Global equities and Australian small caps present the greatest opportunity for local investors in the coming six months, but current high valuations and economic headwinds remain front of mind for advisers, according to the inaugural Fidante Adviser Markets Survey released yesterday.

Fidante surveyed over 200 financial advisers on the current opportunities and challenges for investment markets and where they were planning to allocate client funds in the coming six months.

Global equity markets were forecast to deliver the best returns over the coming six months. Close to half of the advisers surveyed (46%) remained bullish on the performance of global equities, with 39% predicting it would be the best performing asset class over the period. One in five advisers plan to increase allocation to global equities in the coming six months.

Victor Rodriguez, Chief Executive, Funds Management, Challenger, said the results reinforce the trend Fidante is seeing with recent strong inflows to this asset class and clear demand for active management to capitalise on the opportunities.

“Led by the US, global equities have driven significant outperformance for several years now, and our research shows that advisers expect this trend to continue as we enter 2025,” Mr Rodriguez said.

“Specifically, AI and healthcare are driving exciting growth potential in global equities, and we expect inflows to reflect this. As we head into 2025, advisers’ optimism highlights the lasting appeal of global equities as a powerful tool to generate returns, even amid economic challenges.”

Despite the bullish outlook, advisers have flagged concerns that global markets may be becoming too expensive. High valuations were the leading concern for 26% of respondents, closely followed by economic slowdown (23%) and geopolitical tensions (22%).

Locally, economic slowdown (44%) and high valuations (27%) were by far the two leading concerns facing Australian equities in the coming six months.

“Inflation is no longer a primary concern and attention is focused on valuations and the potential for an economic slowdown,” Mr Rodriguez said.

The great rotation to small caps

While large caps have driven market highs over the past year, led by the Magnificent Seven in the US, survey respondents are flagging small cap equities as a priority for the coming six months.

Over half of advisers surveyed (51%) are bullish on the outlook for Australian small caps, compared to only 32% bullish on Australian large cap stocks.

In fact, 35% of advisers expect to increase client allocations to Australian small caps, second only to fixed income (41%). Only 9% are planning on increasing allocation to Australian large caps, while 16% plan to decrease allocations.

Evan Reedman, General Manager, Fidante Affiliates, said as markets have been re-setting record highs in recent months, advisers are taking the opportunity to rebalance portfolios.

“Advisers are responding to high valuations in large cap stocks,” Mr Reedman said. “We’re observing a clear shift in focus towards Australian small cap equities, with advisers recognising untapped value in this space after lagged performance in recent years.

“Fidante’s latest Adviser Markets Survey shows that diversification and targeted allocation remains a key priority for advisers with infrastructure (30%), private credit (24%), and private equity (18%) capturing their attention,” he added.

“There is no doubt that advisers are looking for active management in market segments that provide a clear purpose in a portfolio. Whether that be to generate alpha, provide uncorrelated returns, or deliver a consistent income stream,” Mr Reedman said.

Read the full report.

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Joseph Lai

Fidante Partners has united with former long-time Platinum Asia Fund portfolio manager Dr. Joseph Lai and other former Platinum Asset Management alumni to launch a new emerging market fund manager, Ox Capital Management (OxCap).

The new boutique expects to launch a long-only and a long-short emerging market equity fund later this year. Dr. Lai, OxCap Principal and Lead Portfolio Manager, is joined by Douglas Huey and Alan Zhang, OxCap Principals and Portfolio Managers.

The team will use their expertise and long experience of investing in Asia and other dynamic emerging markets to find compelling investment opportunities, taking a long-term, contrarian approach.

Dr. Lai worked at Platinum Asset Management for 17 years, beginning as an analyst specialising in Asian stock picks. He became a fund manager in 2007 focusing on stock selection and was the lead portfolio manager for the Platinum Asia Fund from the end of 2014 until the end of 2020.

Mr. Huey joins OxCap from PM Capital where he was an analyst and portfolio manager for the last three years. Prior to this he was an analyst at Platinum Asset Management for more than 21 years. He covered Asia from 1996-2000, the technology sector globally from 2000-2014, and South East Asia, Korea and Taiwan from 2014 to 2018.

Mr. Zhang, who is currently based in China, joins OxCap from Platinum Asset Management where he was an analyst for the Platinum Asia Fund for more than three years.

Sydney-based Sid Mehta rounds out the team in an Analyst role with over 10 years experience working in corporate finance, strategy and start-ups across India, Singapore, Hong Kong and Australia.

Dr. Lai said he and fellow Principals Mr. Huey and Mr. Zhang are strong believers in the boutique approach because of their desire to build something significant that they could co-own and be totally aligned with investors in.

“We’ve assembled a team of the top talent in the emerging markets space and we look forward to bringing our unique and differentiated approach to investors. From a career and market standpoint we see this as the perfect time to launch what we envisage as an enduring relationship with a very capable partner.

“Fidante has a proven track record of success with specialist investment management businesses. OxCap is delighted to join the Fidante family,” Dr. Lai said.

Global Head of Fidante Partners, John Burke said Fidante was constantly looking to increase its global footprint and expand asset classes offered.

“OxCap is a great fit for Fidante in terms of shared values and providing our investors with access to world class emerging market managers. As a new boutique in the Fidante stable, OxCap presents an exciting investment opportunity over the short and medium term.

“Active investing is at the heart of what we do. For the highly skilled OxCap team, our strategic, operational and distribution expertise gives them access to a large investor base while enabling them to focus on what they do best – managing money,” Mr. Burke said.

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John Burke

Fidante Partners (Fidante) has welcomed global sustainability specialists Impax Asset Management (Impax) to its stable of strategic partners, signing on as distribution partner for Impax in Australia and New Zealand.

Founded in 1998, Impax is a specialist asset manager, with approximately £30.0 billion (as of 31 March 2021) in both listed and private market strategies, investing in the opportunities arising from the transition to a more sustainable global economy.

Impax Founder and CEO Ian Simm said Impax was drawn to Fidante as one of Australia’s leading investment management firms. “Fidante is very well-positioned to support Impax’s future growth aspirations among institutional and wholesale clients in Australia and New Zealand. As a significant player in the market, Fidante’s focus on partnering with specialist asset managers matches our own position as a specialist manager focusing on the transition to a more sustainable economy.”

In Australia, Impax are the delegated investment manager of the BNP Paribas Environmental Equity Trust, an Australian registered unit trust (Fund). The Fund is based on the Impax Leaders strategy, a global thematic strategy investing in companies that are developing innovative solutions to resource challenges in four key areas: new energy; water; waste and resource recovery; and sustainable food, agriculture and forestry. It is planned that the Fund will be rebranded under the Impax name and distributed by Fidante.

Global Head of Fidante Partners John Burke said: “Fidante is excited to be partnering with such a high-quality manager to bring world-class investment capability to the local Australian market. Impax’s approach focuses on the transition to a more sustainable economy, which it has been doing throughout its corporate history spanning over 20 years. This, combined with its exceptional management team and thought leadership, makes the Firm a clear market leader globally.”

The strategic partnership reinforces Fidante’s commitment to ESG. “We seek to partner with investment managers who are committed to continuous progress in ESG integration. As demand for high-quality sustainable products continues to grow, we’re delighted to offer investors access to one of the pioneers in global sustainable investing.” Burke said.

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