Small Companies Fund Performance: July 2026

July was another volatile month for small caps, but the Datt Capital Small Companies Fund outperformed its benchmark and continued deploying cash into financial services names trading below their growth profile.

Outperforming a Falling Benchmark While Deploying Cash

In July 2026, the Datt Small Companies Fund (Class A) recorded a net return of -3.01%, outperforming its benchmark by 0.16%. The Fund has returned 13.02% per annum net to investors since inception. The decline was driven by health care and discretionary retail holdings, both marked down against a backdrop of persistent cost of living pressure and weak consumer sentiment.

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 - July 26 - Small Companies Fund Newsletter"

To summarise:

• Monthly return: -3.01%
• 3-month return: -8.93%
• 6-month return: -25.95%
• 1-year return: -16.93%
• Annualised return since inception: +13.02%
• Net return since inception: +41.47%
• Unit price: $1.2353
• 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 Fell Further Than Large Caps Again in July

The Small Ordinaries fell 3.2% in July, materially underperforming the ASX 200's 2.3% gain. Small Industrials declined 2.9% and Small Resources fell 3.7%. Energy was a rare positive beneath the headline weakness, though market breadth remained poor and cross-sectional dispersion widened further.

The Value Gap Between Small and Large Caps Is Approaching Historical Extremes

The market's flight towards large caps intensified rather than moderated in July, extending a trend that has dominated returns for over a year. In the team's assessment, the resulting valuation gap between small and large caps is approaching levels rarely seen in the Fund's history, with escalating M&A interest across the sector cited as a supporting signal.

Portfolio Positioning – July Snapshot

99% of the Fund's capital was deployed at month end. New capital was directed into financial services businesses trading at valuations the team considers attractive relative to their growth profile, while the Fund maintained its material energy weighting, concentrated in coal producers rather than the oil and gas names that led the sector's rally during the month. At month end, the Fund held 30 positions, with the top five accounting for 37% of the portfolio. The three largest holdings, in alphabetical order, were:

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

Financials was the Fund's largest sector exposure at 26.1%, followed by Energy at 22% and Materials at 19.4%.

A Fund Positioned for a Broadening Market

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. August commenced on a positive note, and the Fund is intentionally positioned to benefit from a broadening of returns beyond the large-cap concentration that dominated the past year. The Fund's approach continues to demonstrate:

• High conviction positioning across 15 to 25 holdings
• Independent research into competitive advantage, capital allocation and valuation
• Full manager alignment with investors
• Active deployment into dispersion, not index tracking

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.

About Datt Capital

Datt Capital is an investment fund manager in Australia focused on capital preservation and risk-adjusted returns. Our philosophy is centred on long-term wealth creation, combining disciplined research, opportunistic thinking and a strong focus on capital preservation.