WAM Capital (WAM) Investor Update summary

Portfolio performance and positioning

• Income Maximiser fund is outperforming its benchmark, delivering stable returns and a running yield of 4.6%, with profit and capital reserves at 4.7% of NTA, on track to meet dividend guidance.

• Small caps are expected to outperform due to attractive valuations, a rate-cutting cycle, and improved outlooks, with key picks in rate-cut beneficiaries, technology, mining services, and catalyst-driven ideas.

• Real estate, especially REITs, is positioned for a recovery, driven by demand-supply imbalances, positive macro trends, and sector rebalancing, with Goodman Group, Mirvac, and GPT Group as top holdings.

• Global portfolio focuses on undervalued growth with AI-driven productivity as a core theme, investing in enablers, infrastructure, and early adopters like Quanta, Synopsys, and SAP.

• Alternative assets portfolio is increasing real estate exposure, capitalizing on the disconnect between listed and unlisted valuations, and offers a diversified mix including private equity, infrastructure, and water assets.

Market outlook and investment themes

• Short-term interest rates are expected to rise, while long-term rates may stay flat or fall, favoring a bear flattening regime and overweighting resource stocks.

• Commodity exposure currently offers the best reward-to-risk, while defensive quality companies are less favored.

• AI infrastructure and adoption are set to drive a global productivity boom, with significant capital flowing into data centers, utilities, and software.

• Real estate fundamentals remain strong across all subsectors, with chronic supply-demand imbalances expected to persist through FY2030 and beyond.

• LICs and LITs are expected to see narrowing discounts to NTA as interest rates plateau or fall and as active management regains favor.

Strategic initiatives and impact

• Active management and sophisticated risk analysis underpin portfolio construction, with a focus on diversified sources of outperformance.

• Alternative assets provide inflation protection, diversification, and smoother returns, with WMA offering retail access to institutional-quality investments.

• Future Generation funds deliver diversified portfolios with strong dividend yields and support social impact initiatives, enabled by fee waivers from fund managers.

• WAM Strategic Value targets discount asset opportunities, actively managing positions and engaging in campaigns to realize intrinsic value for shareholders.

• Both income and impact objectives are being met, with robust profit reserves supporting dividend sustainability and measurable community benefits.