Small Companies Fund Performance: August 2026

Energy and resources holdings drove the Datt Capital Small Companies Fund’s August return. Small caps outperformed large caps by more than three percentage points, and the Fund ended the month with close to 12% of its capital in cash.

Energy and Materials Drove a Month of Outperformance

In August 2026, the Datt Small Companies Fund (Class A) recorded a net return of 6.45%, outperforming its benchmark by 1.27 percentage points. The Fund has returned 15.06% per annum net to investors since inception. Energy was the largest contributor, as oil and thermal coal prices held at elevated levels following the earlier disruption in the Middle East. Materials was the next largest, with the Fund’s resource holdings responding to improved risk appetite and company-specific catalysts.

The month recovers part of a difficult period. The Fund’s 6-month and 1-year returns remain negative and behind the benchmark over both periods. One month of outperformance is too short a window to judge a strategy built around multi-year holding periods.

Performance Snapshot

Performance reported after all fees and expenses and relates to Class A units. Inception October 2023. Past performance is not an indicator of future performance.

Download the full report: “Class A - August 26 - Small Companies Fund Newsletter”

To summarise:

• Monthly return: +6.45%
• Benchmark return (August): +5.18%
• 3-month return: -1.78%
• 6-month return: -13.32%
• 1-year return: -15.76%
• Annualised return since inception: +15.06%
• Net return since inception: +50.59%
• Unit price: $1.3150
• Fund status: Open to wholesale investors

Disclaimer:

• The Fund’s benchmark is the S&P/ASX Small Ordinaries Accumulation Index (XSOA).
• Past performance is not a reliable indicator of future results and does not guarantee future returns. Investment in the Fund is limited to wholesale and sophisticated investors as defined under Australian law.
• The Datt Small Companies Fund was launched in October 2023. Returns shown relate to Class A units, are calculated net of all fees and expenses, and reflect actual performance since inception. Performance may vary for individual investors depending on the timing of their investment.

Small Caps Outperformed Large Caps by More Than Three Percentage Points

The Small Ordinaries rose 5.18% in August, against a 1.54% gain for the ASX 200. Sector returns across the market were highly dispersed. Gold reached multi-month highs as softer real yields lowered the cost of holding an asset that pays no income, with safe haven demand adding support. Oil and coal prices stayed above their pre-conflict levels.

Elevated Fuel Prices Reached the Inflation Data

The RBA held the cash rate at 4.35% on 11 August, its second consecutive hold after three 25-basis-point rises earlier in 2026. Its statement acknowledged that oil and related commodity prices remained elevated relative to pre-conflict levels. The July CPI, released on 26 August, showed the effect. Automotive fuel prices rose 7.5% in the month after three consecutive monthly declines, even as headline inflation eased to 3.5% from 3.8% in June.

The same price move works in opposite directions across the small-cap market. For energy producers, a higher realised price flows largely to margin, because production costs do not rise in step. For businesses that rely on borrowing or discretionary spending, higher fuel costs add to the inflation pressure that keeps the rate outlook uncertain. Sector exposure therefore shaped August returns as much as stock selection did.

The Valuation Gap Flagged in July Began to Narrow

The July report noted that the valuation gap between small and large caps was approaching levels rarely seen in the Fund’s history. August’s outperformance is consistent with that gap beginning to close, and the team continues to view small-cap valuations as attractive. A single month cannot confirm a durable change in market leadership.

Portfolio Positioning – August Snapshot

88% of the Fund’s capital was deployed at month end. During the month, the Fund increased its resources exposure, building positions in a select number of lithium and gold companies with improving fundamentals. The team entered September with a cautious view, given the month’s history as a weaker period for equities, and held cash to deploy should conditions soften.

At month end, the Fund held 25 positions, with the top five accounting for 39% of the portfolio. The three largest holdings, in alphabetical order, were:

• Core Lithium (CXO): Materials
• New Hope Corporation (NHC): Energy
• Yancoal Australia (YAL): Energy

Materials was the Fund’s largest sector exposure at 46.3%, followed by Energy at 27.1% and cash at 11.7%. The remaining exposure sat in Real Estate Management & Development (6.8%), Software & Services (6.0%) and Pharmaceuticals & Biotechnology (2.2%).

[Placeholder: one sentence on the exit from financial services. See note 1 below.]

What the Positioning Means for Investors

The Datt Small Companies Fund targets small and micro-cap Australian businesses outside the ASX100, an area of the market the team considers under-researched and prone to mispricing. Materials and Energy together account for 73.4% of the portfolio, so near-term returns are closely tied to commodity prices in both directions. The cash position gives the Fund capacity to add to holdings if prices fall. The Fund’s approach continues to demonstrate:

• High conviction positioning across 15 to 25 holdings
• Independent research into competitive advantage, capital allocation, industry structure and valuation
• Full manager alignment with investors
• Capital deployed where dispersion creates mispricing, independent of index weights

About Datt Capital

The Datt Small Companies Fund is an actively managed Australian equities strategy investing in small and micro-cap companies outside the ASX 100. The Fund seeks long-term capital growth through high-conviction stock selection, independent research and disciplined risk management.

Its investment process focuses on identifying undervalued businesses with competitive advantages, capable management teams and the potential to grow over time.

To learn more about the Small Companies Fund, visit the Fund page or contact our Head of Distribution, Daniel Liptak, on 0419 004 524 or via email at daniel@datt.com.au.