According to Lonsec’s report, the “Co-Portfolio Managers bring a wealth of experience and a deep understanding of the global small-cap market. Their alignment with the Fund’s objectives ensures a cohesive and focused investment strategy.”

Managed by Simon Wood and Tobias Bucks, the Ausbil Global SmallCap Fund aims to exploit the inefficiencies within the asset class by investing in quality companies with unrecognised growth potential at attractive valuations.

“We are delighted with Lonsec’s upgrade of the Ausbil Global SmallCap Fund to Recommended,” said Mark Knight, CEO at Ausbil.

“This recognition underscores Ausbil’s commitment to delivering superior returns for our investors through a disciplined and differentiated investment approach. We believe this upgrade will further strengthen our position in the market,” Knight added.

Launched in May 2018, the investment strategy uses both qualitative and quantitative analysis and tools alongside a disciplined risk management process, with the aim of producing consistent and risk- controlled outperformance. The Fund’s universe is the 23 developed markets that comprise the MSCI World Small Cap Index.

The Ausbil Global SmallCap Fund is available on Asgard, BT Panorama, CFS Edge, Hub 24, MLC Expand, Macquarie Wrap, Mason Stevens, mFund, Netwealth, North and Praemium.

The post Lonsec upgrades rating for Ausbil Global SmallCap Fund to ‘Recommended’ appeared first on AdviserVoice.

Overall, tariffs will result in upward pressures on supply chains, with input prices keeping US inflation somewhat elevated, and slowing the pace of global trade growth. Ausbil’s view on tariffs under Trump is that the US is expected to benefit at the marginal cost of higher inflation.

Despite rapid change, the global growth outlook remains positive

Global macro settings are expected to remain within their ‘back to normal’ levels in 2025 and 2026, supported by a shallower global easing cycle.

We are forecasting a sustainable step-up in global growth to 3.5% for 2025, elevated but stable inflation relative to central bank target levels and limited real rate cuts. The recalibration of restrictive policy settings appears to have run its course, closing in a new higher neutral level relative to recent history.

The US Federal Reserve has pivoted and paused rates in the target range of 4.25-4.5% as “inflation remains somewhat elevated.” The structural themes of decarbonisation and accelerating de-globalisation will continue under Trump 2.0, and will underpin activity.

Taken together, global GDP is continuing on a positive upward trajectory towards its trend rate. Underlying resilient private demand, business investment, employment growth, and easier financial conditions will sustain the expansion of the global business cycle.

We remain vigilant with respect to unpredictable geopolitical events, including the risk of underestimating the impact from Trump’s tariff policies.

We are forecasting a resilient US, and a modest recovery for Europe.  The US growth outlook sustained in the mid-2% range will be driven by Trump’s pro-growth and pro-business policies.

Growth is driven by a resilient labour market remaining at full employment levels, underlying strength in the consumer from real wages growth, a positive wealth effect and private capex investment. The US is experiencing a sustained productivity uplift, where the pace has stepped up to 2.0% from a low pre- pandemic 5-year average of 1.4%.

Europe experienced shallow growth conditions that felt more like a recession, especially for Germany. We are forecasting a gradual recovery in growth, assisted by European Central Bank rate cuts. Year average real GDP growth was a subdued 0.9% in 2024, following 0.4% in 2023 and 3.4% in the post-pandemic rebound of 2022.

Inflation is under control but will remain elevated

We are forecasting elevated but stable inflation relative to central bank target levels in the US and globally.

Core inflation dynamics continue to see persistent sticky services inflation (ex-housing), moderating housing inflation at a much slower rate, and upside risk from goods inflation from potential supply and tariff driven input price shocks.

You can stop worrying about recession

In our view, lingering market fears of a US recession are unfounded and the risk is mitigated by the fact that central banks have significant room to cut nominal rates if recessionary signals eventuate.

The global economy is on a positive upward trajectory in 2025, with lower inflation and real rate cuts.

We remain vigilant on unpredictable geopolitical events that may materially impact our view. War in the Middle East remains a risk to the price of oil and supply chains. The war in Russia and Ukraine carries some existential nuclear risks. These risks are unpredictable but at this stage we do not expect material market disruption.

That said, underlying resilient private demand, business investment, employment growth, and multiple rate cuts are expected to sustain the expansion of the global business cycle.

By Jim Chronis, Ausbil Chief Economist, Associate Director – Debt and Diversifieds

———

What does Trump 2.0 mean for global small caps?

Before Trump 2.0, we had isolated several key themes that are driving portfolio construction. These thematics remain intact and in some cases, we expect them to be accelerated under Trump 2.0.

This includes the electrification of things, AI and data centre demand, and investment in grid upgrade and expansion.

These growth drivers have benefited from significant fiscal stimulus in the CHIPS Act and the Inflation Reduction Act.  Trump 2.0 is expected to add deregulation, tax cuts and a general pro-business approach to governing that we expect to be incrementally stimulative for the US economy, especially in sectors like energy, industrials focused on US manufacturing, information technology firms in the data centre and AI complex and companies leveraged to electrification and grid upgrade.

As an example, Celestica, is a market leader in data centre networking equipment, headquartered in Canada, is expected to benefit from ongoing investment in US data centres, AI and networking efficiencies. President Trump’s recent announcement of the Stargate AI project, a US$500 billion joint venture between OpenAI, Oracle and Softbank, highlights the robust investment environment in technology.

The clear and present risk we are monitoring is that of tariffs, and the potential impact on the US and world economy. Tariffs and potentially strong growth in the US could lead to inflation accelerating again which may require the US Federal Reserve to end their interest rate cutting cycle and potentially consider tightening interest rates.

However, many of the small cap companies in the US undertake a lot of their manufacturing domestically therefore they are heavily insulated from the effects of tariffs, unlike their foreign competitors. Ultimately this could give a boost to US small-cap companies.

By Simon Wood & Tobias Bucks, Co-Portfolio Managers Ausbil Global Small Caps

———

What does Trump 2.0 mean for global infrastructure

Trump 2.0 comes amid the multi-year infrastructure stimulus undertaken by the Biden government, and which we believe is unlikely to cease under Trump.

From an infrastructure perspective, it helps to look at Trump 1.0 for some help in extracting fact from rhetoric. Under Trump 1.0, in contradistinction to the fearmongering on renewables and fossil fuels, coal was retired more under Trump than any other prior administration, and renewables grew, albeit modestly. In fact, fossil fuel investment actually increased again under Biden, though against a rapid increase in clean energy investment.

While Trump failed to win a consecutive second term, this subsequent second term offers him four years to achieve his goals. In energy, Trump is looking back at fossil fuels in the form of LNG as a base load power to stimulate onshoring for the coming four years, releasing volume that is readily available.

However, the latent time delays for other power sources like gas turbines, hydro and nuclear, suggest that Trump will necessarily need to be supportive of wind and solar renewables that can be readily expanded during his term to achieve Trump

Trump’s energy goals and his policy for onshoring, protecting and expanding US manufacturing is a major driver of pipeline infrastructure for the liquification and export of natural gas as LNG. Both pipelines and rail are expected to benefit from better growth, more energy shipping, onshoring and ‘made in America’ protectionist policies.

Across all infrastructure sectors, Trump deregulation is expected to spark more M&A, and just as Australia liberalised the market and precipitated significant M&A activity, we believe the US should follow, subject to state and anti-trust considerations.

Artificial intelligence and data storage will also add to energy demand. These are areas that are benefiting under Trump policy with the announcement of Stargate, and his close relationships with a range of technology leaders. In infrastructure, we are agnostic as to which AI models may become dominant (like DeepSeek, Gronk, Gemini, Chat GPT, etcetera) as infrastructure will benefit from the overall rise in energy demand. In general, we expect that improved macro-economic conditions and reshoring will benefit all infrastructure sectors.

Risks to avoid

The markets ran hard in calendar 2024, and while Ausbil is calling calendar 2025 a period of ‘risk-on’ given the positive economic conditions, we still acknowledge that there is a real risk around valuations. We think that improving growth, and pro-business policies will help reduce this risk. Tariffs are likely to cause some distortions, but for contracted infrastructure assets, the risks are relatively low.

There are also potential currency risks. The US budget deficit will expand with lower taxes and potential interruptions from tariffs, however, the potential is for onshoring and resurging US manufacturing to offset this with greater productivity. Finally, the nature of Trump foreign policy is such that hard dealmaking could precipitate more geopolitical volatility, though looking back at Trump 1.0, where no major geopolitical disasters occurred, it is hoped Trump 2.0 will be similar.

Positioning for the macro-economic outlook

As we progress through 2025, we believe essential infrastructure stocks remain positioned for continued growth despite increased market volatility. President Trump’s administration is expected to introduce fiscal stimulus and deregulation measures, which could benefit US infrastructure investments such as rail, energy and utilities.

The AI sector’s rapid development is set to drive structural increases in electricity demand, further supporting North American utilities and energy infrastructure companies. LNG exports continue to play a key role in global energy markets, including Cheniere’s Corpus Christi expansion nearing completion, in which we have a holding.

In Europe, uncertainty remains elevated due to political instability and macroeconomic concerns. However, select infrastructure assets continue to offer attractive opportunities.

While infrastructure stocks have faced headwinds from interest rates, the fundamental case remains strong. We see valuations as reasonable and continue to focus on high-quality, well- positioned companies. Our long-term investment thesis remains intact, with a robust pipeline of opportunities in energy, transport, and across the utility space.

By Tim Humphreys, Head of Global Listed Infrastructure

The post Who benefits in the Trump 2.0 world? appeared first on AdviserVoice.

The need to expand the power distribution grid is driven by economic growth, population growth, the switch to renewable energy and the electrification of things and will see installed electricity almost double on the base case out to 2050, according to the US Energy Information Administration (EIA). The outcomes may vary depending on zero carbon technology costs, economic growth, and the oil price.

Supporting grid development is a range of policy initiatives and stimulus largely linked to the pandemic stimulus packages and driven by the shift towards decarbonisation.

The Infrastructure Investment and Jobs Act (2021) is providing US$1.2 trillion in stimulus, including US$550 billion of new federal investment in America’s infrastructure, economic resilience, internet, and other initiatives.

The Inflation Reduction Act (2022) has added US$500 billion in stimulus through spending and tax credits. The CHIPS and Science Act (2022) – CHIPS (Creating Helpful Incentives to Produce Semiconductors) – has added US$280 billion in funding for American semiconductor research, development, manufacturing and workforce development, some of which will factor in the upgrade and renewal of US electricity grids. Other funding will come from utilities, the users and operators of these grids, and the customers who ultimately pay for energy and transmission.

Small cap opportunities

While the electricity grid might seem the domain of mega-cap utility stocks, due to the complexity of the nature of this infrastructure and its underlying components, we believe that companies that contribute to the servicing, upgrade and expansion of the electricity infrastructure will also have significant roles in the infrastructure upgrade.

We believe that certain small-cap companies, due to the relevancy and competitiveness of their operations, will benefit from the potential sizeable investment in the upcoming upgrade.

Three such small caps that we think are set to benefit from potential growth in demand for their products and services from the infrastructure upgrade are:

1. Atkore (NYSE: ATKR), which manufactures electrical cable and cable infrastructure.
2. EMCOR Group (NYSE: EME), involved in electrical and energy infrastructure construction.
3. NKT (OMX: NKT), a manufacturer of cables and cable accessories for energy infrastructure.

There is significant potential for some specialist small-cap stocks which the market may have under-appreciated. Atkore, for example, is a leading provider of electrical infrastructure, including cables, piping conduits and electrical raceways used in a whole array of construction (data centres, grid upgrades, manufacturing facilities, and office, industrial and residential new builds, and renovations). Atkore’s conduit products serve a crucial role in facilitating the underground placement of power lines, commonly known as grid hardening. By moving power lines underground, this enables the electricity grid to better withstand the effects of extreme weather events and other natural disasters, such as wildfires.

We believe core earnings are supported by the strategy’s expectation that non-residential capital expenditure will continue to increase in the US, driven by several themes, including: the onshoring of supply chains back to the US; grid upgrades; ongoing non-residential manufacturing investment; and government support.

The strategy is also seeing catalysts supporting demand for Atkore’s conduit products from some of the largest direct US federal grid investments in history. This includes the Grid Resilience and Innovation Partnerships (GRIP) Program initial $3.46bn investment (of a total $10.5bn) for 58 projects across 44 states to strengthen electricity grid resilience and reliability across the United States. We believe Atkore’s national network of manufacturing plants are positioned to capture national grid hardening and resiliency investments with the potential to drive positive earnings revisions for these segments.

Another notable US company that we think is positioned to benefit from the boom in grid investment is EMCOR. EMCOR is at the heart of the grid expansion as a constructor of critical electrical infrastructure, including semiconductor plants, biotechnology environments, and energy infrastructure. EMCOR’s electrical construction and facilities segment covers planning, installing, operating, maintaining, and protecting complex operating plants, including those required to support and maintain complex electrical energy grids.

Large scale grid related projects which tend to be long-term endeavours are expected to provide a stable and growing revenue stream while also improving margin profile for EMCOR as they optimise their operations to cater for increased demand.

Based out of Denmark and listed on Nasdaq Copenhagen, another company set to benefit is NKT which manufactures and installs low, medium and high voltage cable for the electrical grid. Founded in the 19th century, NKT is a leader in electrical transmission and distribution across 16 countries.

The pipeline of renewable energy installations has surged on rising net zero commitments and investment, driving the need to expand and upgrade transmission networks. This includes renewable energy from remote resource-rich areas to population or industrial centres. Integral to transporting power over long distances are high voltage direct current (HVDC) transmission systems due to their efficiency qualities compared to other systems.

Outlook

The most exciting aspect of the grid upgrade is that these small-cap companies have strong, largely unassailable specialisations in the manufacture, installation and maintenance of this major energy infrastructure. As a result, they are looking into decades of above-average demand growth which is hard for others to contest. We believe that the outlook for earnings and earnings growth for these small caps is largely yet to be recognised by the market, offering significant potential for unrecognised earnings growth over the coming years, backed by a rapidly unfolding world charged with renewable energy.”

By Simon Wood, Portfolio Manager, Global Small Caps

The post Driving thematics in the US appeared first on AdviserVoice.