Australian small caps momentum meets earnings growth into 2026
2025 has been a defining year for Australian small caps, delivering strong absolute returns and outperforming the larger end of the Australian equity market after a few challenging years. This resurgence has been supported by a more accommodative domestic environment driven by interest rate cuts.
Looking ahead to 2026, we believe the cyclical outlook for Australian small caps remains constructive. While some domestic macroeconomic tailwinds may moderate, the asset class continues to benefit from a broadening in earnings growth across the small-cap stock universe. Market expectations also indicate that Australian small caps are positioned to deliver higher earnings growth than large caps over the next two years. Importantly, relative to previous up-cycle periods in the Australian small-caps market, we see further upside potential in both the duration and magnitude of the current cycle.
From a structural perspective, Australian small caps offer investors early-stage exposure to exciting growth opportunities in emerging industries, diversification benefits across broad industry allocations and exposure to one of the few remaining inefficiently priced segments of the market to exploit. In addition, the domestic small caps landscape has evolved significantly over the past 15 years, with the index, S&P/ASX Small Ordinaries Index, now comprising of higher quality companies with strong balance sheets and improved earnings characteristics. These factors help support the case for a persistent Australian small cap active management premium.
In summary, Australian small caps continue to stand out as an appealing opportunity although investors need to be selective with selecting the right Australian small caps manager to exploit these opportunities.
2025 has been a defining year for Australian small caps, delivering strong absolute returns and outperforming the larger end of the Australian equity market after a few challenging years. This resurgence has been supported by a more accommodative domestic environment driven by interest rate cuts.
Looking ahead to 2026, we believe the cyclical outlook for Australian small caps remains constructive. While some domestic macroeconomic tailwinds may moderate, the asset class continues to benefit from a broadening in earnings growth across the small-cap stock universe. Market expectations also indicate that Australian small caps are positioned to deliver higher earnings growth than large caps over the next two years. Importantly, relative to previous up-cycle periods in the Australian small-caps market, we see further upside potential in both the duration and magnitude of the current cycle.
From a structural perspective, Australian small caps offer investors early-stage exposure to exciting growth opportunities in emerging industries, diversification benefits across broad industry allocations and exposure to one of the few remaining inefficiently priced segments of the market to exploit. In addition, the domestic small caps landscape has evolved significantly over the past 15 years, with the index, S&P/ASX Small Ordinaries Index, now comprising of higher quality companies with strong balance sheets and improved earnings characteristics. These factors help support the case for a persistent Australian small cap active management premium.
In summary, Australian small caps continue to stand out as an appealing opportunity although investors need to be selective with selecting the right Australian small caps manager to exploit these opportunities.
About the Australian Small Companies Fund
The Australian small cap manager with large institutional backing is now available to advisers.
The Maple-Brown Abbott Australian Small Companies Fund (the Fund) is managed by our experienced Australian small companies team, led by Co-Portfolio Managers Phillip Hudak and Matt Griffin. The Fund continues to generate strong returns since inception (24 June 2022), returning 23.9% (net of fees)*, outperforming the benchmark S&P/ASX Small Ordinaries Total Return Index by +10.9%* on an annualised basis. This performance has been driven by idiosyncratic stock selection and consistent sustainable earnings delivery above the market, reflecting the strength of our investment philosophy and disciplined process.
* As at 30 November 2025.
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The Australian small cap manager with large institutional backing is now available to advisers.
The Maple-Brown Abbott Australian Small Companies Fund (the Fund) is managed by our experienced Australian small companies team, led by Co-Portfolio Managers Phillip Hudak and Matt Griffin. The Fund continues to generate strong returns since inception (24 June 2022), returning 23.9% (net of fees)*, outperforming the benchmark S&P/ASX Small Ordinaries Total Return Index by +10.9%* on an annualised basis. This performance has been driven by idiosyncratic stock selection and consistent sustainable earnings delivery above the market, reflecting the strength of our investment philosophy and disciplined process.
* As at 30 November 2025.
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Our investment philosophy
Rather than defining ourselves by a particular investment style, our investment philosophy is based on our belief that earnings drive share prices. Our three core beliefs underpinning the philosophy are:
By taking time to understand where a company is in the earnings cycle, we can determine the price paid for the future earnings stream. Given the breadth of the Australian small cap market, we believe we can find undervalued companies where we have conviction in medium-term earnings delivery at any point of the market cycle.
Rather than defining ourselves by a particular investment style, our investment philosophy is based on our belief that earnings drive share prices. Our three core beliefs underpinning the philosophy are:
- share price performance is driven by medium-term earnings delivery with consideration given to valuation and where the company is in the earnings cycle;
- sustainable business models, which include a company’s persistence of earnings over longer time periods, are an important driver of long-term performance and superior risk-reward characteristics; and
- companies which disappoint on short-term earnings expectations typically underperform.
By taking time to understand where a company is in the earnings cycle, we can determine the price paid for the future earnings stream. Given the breadth of the Australian small cap market, we believe we can find undervalued companies where we have conviction in medium-term earnings delivery at any point of the market cycle.
Find out more
Our latest Investment Insights:
- View the Fund's ratings and platform availability
- View Fund documents
- About Maple-Brown Abbott
Our latest Investment Insights:
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All weather portfolio
Capture ratios measure a portfolio’s return versus its performance benchmark during upward and downward market trends. In up markets, an upside capture ratio above 100% indicates a portfolio has outperformed its performance benchmark during periods of positive market returns.
A downside capture ratio below 100% indicates a portfolio has outperformed during periods of negative market returns. The Fund’s upside capture ratio of 97% shows Fund performance has typically kept pace with benchmark performance during periods of up markets. The Fund’s downside capture ratio of 48% shows the Fund has historically outperformed the benchmark by a significant margin during down markets.
These measures are indicators of a diverse, all-weather portfolio that is achieving its aim of delivering consistent results across market conditions and reflects the importance we place on risk management by aiming to minimise downside risk while participating in the upside.
Capture ratios measure a portfolio’s return versus its performance benchmark during upward and downward market trends. In up markets, an upside capture ratio above 100% indicates a portfolio has outperformed its performance benchmark during periods of positive market returns.
A downside capture ratio below 100% indicates a portfolio has outperformed during periods of negative market returns. The Fund’s upside capture ratio of 97% shows Fund performance has typically kept pace with benchmark performance during periods of up markets. The Fund’s downside capture ratio of 48% shows the Fund has historically outperformed the benchmark by a significant margin during down markets.
These measures are indicators of a diverse, all-weather portfolio that is achieving its aim of delivering consistent results across market conditions and reflects the importance we place on risk management by aiming to minimise downside risk while participating in the upside.
Average monthly performance in rising markets
Source: MBA, data since inception of the MBA Australian Small Companies Fund (24 June 2022) to 30 Novemberr 2025. Benchmark is the S&P/ASX Small Ordinaries (Total Return) Index. Performance is based on the movement in net asset value per unit plus distributions and is before tax and after all fees and charges. Imputation and foreign income tax offsets are not included in the performance figures. Past performance is not a reliable indicator of future performance.
Capture ratios – upside and downside
Source: MBA, data since inception of the MBA Australian Small Companies Fund (24 June 2022) to 30 November 2025. Benchmark is the S&P/ASX Small Ordinaries (Total Return) Index. Performance is based on the movement in net asset value per unit plus distributions and is before tax and after all fees and charges. Imputation and foreign income tax offsets are not included in the performance figures. Past performance is not a reliable indicator of future performance.
Average monthly performance in falling markets
Source: MBA, data since inception of the MBA Australian Small Companies Fund (24 June 2022) to 30 November 2025. Benchmark is the S&P/ASX Small Ordinaries (Total Return) Index. Performance is based on the movement in net asset value per unit plus distributions and is before tax and after all fees and charges. Imputation and foreign income tax offsets are not included in the performance figures. Past performance is not a reliable indicator of future performance.
Rating / recommendation
Platform availability
AMP MyNorth | BP Panorama + Asgard | CFS Wrap + CFS Edge | HUB24 | Mason Stevens | Netwealth
Lonsec
The Lonsec rating issued 11/2025 is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings information and to access the full report. ©2025 Lonsec. All rights reserved.
Morningstar Medalist Rating(TM)
Assigned as of 08/01/25
Analyst Driven % 100
Data Coverage % 100
Fund Maple-Brown Abbott Australian Small Companies received a Morningstar Medalist Rating(TM) of ‘Silver’ on 08/01/25.
©2025 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This report or data has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or New Zealand wholesale clients of Morningstar Research Ltd, subsidiaries of Morningstar, Inc. Any general advice has been provided without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide at morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Morningstar’s publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a financial adviser.
Zenith
The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned MPL1241AU February 2024) referred to in this piece is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual, including target markets of financial products, where applicable, and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at Fund Research Regulatory Guidelines.
* The past performance and experience of the portfolio managers was achieved managing a different fund with substantially the same investment strategy as the Fund. Past performance is not a reliable indicator of future performance.
This information was prepared and issued by Maple-Brown Abbott Ltd ABN 73 001 208 564, Australian Financial Service Licence No. 237296 (“MBA”). This information does not constitute investment advice or an investment recommendation of any kind and should not be relied upon as such. This information is general information only and it does not have regard to any person’s investment objectives, financial situation or needs. Before making any investment decision, you should seek independent investment, legal, tax, accounting or other professional advice as appropriate, and obtain the relevant Product.
The Lonsec rating issued 11/2025 is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445 (Lonsec). Ratings are general advice only, and have been prepared without taking account of your objectives, financial situation or needs. Consider your personal circumstances, read the product disclosure statement and seek independent financial advice before investing. The rating is not a recommendation to purchase, sell or hold any product. Past performance information is not indicative of future performance. Ratings are subject to change without notice and Lonsec assumes no obligation to update. Lonsec uses objective criteria and receives a fee from the Fund Manager. Visit lonsec.com.au for ratings information and to access the full report. ©2025 Lonsec. All rights reserved.
Morningstar Medalist Rating(TM)
Assigned as of 08/01/25
Analyst Driven % 100
Data Coverage % 100
Fund Maple-Brown Abbott Australian Small Companies received a Morningstar Medalist Rating(TM) of ‘Silver’ on 08/01/25.
©2025 Morningstar, Inc. All rights reserved. Neither Morningstar, its affiliates, nor the content providers guarantee the data or content contained herein to be accurate, complete or timely nor will they have any liability for its use or distribution. This report or data has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or New Zealand wholesale clients of Morningstar Research Ltd, subsidiaries of Morningstar, Inc. Any general advice has been provided without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide at morningstar.com.au/s/fsg.pdf. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Morningstar’s publications, ratings and products should be viewed as an additional investment resource, not as your sole source of information. Morningstar’s full research reports are the source of any Morningstar Ratings and are available from Morningstar or your adviser. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a financial adviser.
Zenith
The Zenith Investment Partners (ABN 27 103 132 672, AFS Licence 226872) (“Zenith”) rating (assigned MPL1241AU February 2024) referred to in this piece is limited to “General Advice” (s766B Corporations Act 2001) for Wholesale clients only. This advice has been prepared without taking into account the objectives, financial situation or needs of any individual, including target markets of financial products, where applicable, and is subject to change at any time without prior notice. It is not a specific recommendation to purchase, sell or hold the relevant product(s). Investors should seek independent financial advice before making an investment decision and should consider the appropriateness of this advice in light of their own objectives, financial situation and needs. Investors should obtain a copy of, and consider the PDS or offer document before making any decision and refer to the full Zenith Product Assessment available on the Zenith website. Past performance is not an indication of future performance. Zenith usually charges the product issuer, fund manager or related party to conduct Product Assessments. Full details regarding Zenith’s methodology, ratings definitions and regulatory compliance are available on our Product Assessments and at Fund Research Regulatory Guidelines.
* The past performance and experience of the portfolio managers was achieved managing a different fund with substantially the same investment strategy as the Fund. Past performance is not a reliable indicator of future performance.
This information was prepared and issued by Maple-Brown Abbott Ltd ABN 73 001 208 564, Australian Financial Service Licence No. 237296 (“MBA”). This information does not constitute investment advice or an investment recommendation of any kind and should not be relied upon as such. This information is general information only and it does not have regard to any person’s investment objectives, financial situation or needs. Before making any investment decision, you should seek independent investment, legal, tax, accounting or other professional advice as appropriate, and obtain the relevant Product.