Insights
Media Release
Strong outlook for small caps in current inefficient market
May 2026
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Current market gyrations are generating market inefficiencies that create opportunities for excess investment returns, particularly in the small caps market, says Michael Lovett, Chief Executive Officer of Bell Asset Management.
“The uncertainty created by geopolitical tensions and the AI narrative is resulting in heightened volatility and price dislocations. This creates opportunities for investors with a patient mindset and strong risk management,” he says.
“In the Australian small cap market, the opportunities are looking particularly attractive. For instance, forecast earnings growth in the Small Ords index for the next two years is three times that of the ASX 100.”
With the first Australian small companies fund from Bell Asset Management close to launching, Mr Lovett says many other small cap managers are close to capacity so it is a fortuitous time to launch a new fund that can take full advantage of the current opportunities.
“The timing for establishing our Australian small companies strategy is ideal and, with our new team now on board, we are well advanced in finalising our new fund which will be launched in the next month,” he says.
The Australian Small Companies strategy complements Bell's global equities offering, which has applied a quality-first approach to global equities since 2003. While each strategy operates with its own distinct philosophy, both reflect Bell's commitment to rigorous, bottom-up research and disciplined stock selection and extend the firm's coverage into the domestic small-cap market.
Portfolio Manager Tim Johnston says the team will focus on undervalued but quality stocks which they believe will generate superior returns for investors over the long term.
“The volatility we're seeing right now is creating some of the most compelling entry points in quality small-cap businesses that we've seen in years and we're excited to be launching at exactly this moment. For long-term investors, that kind of dislocation is an opportunity, not a risk.
“Small caps are attractively priced at the moment, with the Small Ordinaries currently trading at a 18 per cent discount to its 10-year average. However the outlook for small caps is particularly strong, with forecast earnings growth for the next two years expected to be three times that of the ASX100. We firmly believe this creates outstanding opportunities for small caps investors, especially when compared to the market performance of the past few years,” Johnston says.
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Important Information:
This video contains information specifically intended for institutional clients, asset consultants, advisers, platforms and researchers, who are professional investors and wholesale clients (as defined in the Corporations Act 2001).
I confirm that I am a professional or wholesale investor as defined by the Corporations Act 2001 and wish to proceed.
Current market gyrations are generating market inefficiencies that create opportunities for excess investment returns, particularly in the small caps market, says Michael Lovett, Chief Executive Officer of Bell Asset Management.
“The uncertainty created by geopolitical tensions and the AI narrative is resulting in heightened volatility and price dislocations. This creates opportunities for investors with a patient mindset and strong risk management,” he says.
“In the Australian small cap market, the opportunities are looking particularly attractive. For instance, forecast earnings growth in the Small Ords index for the next two years is three times that of the ASX 100.”
With the first Australian small companies fund from Bell Asset Management close to launching, Mr Lovett says many other small cap managers are close to capacity so it is a fortuitous time to launch a new fund that can take full advantage of the current opportunities.
“The timing for establishing our Australian small companies strategy is ideal and, with our new team now on board, we are well advanced in finalising our new fund which will be launched in the next month,” he says.
The Australian Small Companies strategy complements Bell's global equities offering, which has applied a quality-first approach to global equities since 2003. While each strategy operates with its own distinct philosophy, both reflect Bell's commitment to rigorous, bottom-up research and disciplined stock selection and extend the firm's coverage into the domestic small-cap market.
Portfolio Manager Tim Johnston says the team will focus on undervalued but quality stocks which they believe will generate superior returns for investors over the long term.
“The volatility we're seeing right now is creating some of the most compelling entry points in quality small-cap businesses that we've seen in years and we're excited to be launching at exactly this moment. For long-term investors, that kind of dislocation is an opportunity, not a risk.
“Small caps are attractively priced at the moment, with the Small Ordinaries currently trading at a 18 per cent discount to its 10-year average. However the outlook for small caps is particularly strong, with forecast earnings growth for the next two years expected to be three times that of the ASX100. We firmly believe this creates outstanding opportunities for small caps investors, especially when compared to the market performance of the past few years,” Johnston says.
-oOo-
Current market gyrations are generating market inefficiencies that create opportunities for excess investment returns, particularly in the small caps market, says Michael Lovett, Chief Executive Officer of Bell Asset Management.
“The uncertainty created by geopolitical tensions and the AI narrative is resulting in heightened volatility and price dislocations. This creates opportunities for investors with a patient mindset and strong risk management,” he says.
“In the Australian small cap market, the opportunities are looking particularly attractive. For instance, forecast earnings growth in the Small Ords index for the next two years is three times that of the ASX 100.”
With the first Australian small companies fund from Bell Asset Management close to launching, Mr Lovett says many other small cap managers are close to capacity so it is a fortuitous time to launch a new fund that can take full advantage of the current opportunities.
“The timing for establishing our Australian small companies strategy is ideal and, with our new team now on board, we are well advanced in finalising our new fund which will be launched in the next month,” he says.
The Australian Small Companies strategy complements Bell's global equities offering, which has applied a quality-first approach to global equities since 2003. While each strategy operates with its own distinct philosophy, both reflect Bell's commitment to rigorous, bottom-up research and disciplined stock selection and extend the firm's coverage into the domestic small-cap market.
Portfolio Manager Tim Johnston says the team will focus on undervalued but quality stocks which they believe will generate superior returns for investors over the long term.
“The volatility we're seeing right now is creating some of the most compelling entry points in quality small-cap businesses that we've seen in years and we're excited to be launching at exactly this moment. For long-term investors, that kind of dislocation is an opportunity, not a risk.
“Small caps are attractively priced at the moment, with the Small Ordinaries currently trading at a 18 per cent discount to its 10-year average. However the outlook for small caps is particularly strong, with forecast earnings growth for the next two years expected to be three times that of the ASX100. We firmly believe this creates outstanding opportunities for small caps investors, especially when compared to the market performance of the past few years,” Johnston says.
-oOo-
