IMC Global Small Companies Fund update – September Quarter 2025

In this IMC fund update for the September Quarter 2025, global small caps bounced back strongly in the US market and among Tech and Industrial sectors. Listen to this latest update from Travis Prentice, Chief Investment Officer of the Informed Momentum Company and Portfolio Manager of the IMC Global Small Companies Fund, as he shares how the fund navigated the volatility, where performance was strongest, and why adaptability continues to drive the strategy.

Watch/Listen to the September Quarter 2025 IMC fund update ⏬:

 

 

Transcript:

IMC Global Small Companies Fund Performance for the Quarter

As far as market environments concerned in the September quarter, global equities were broadly positive. A lot of the theme that was driving markets and the macro narrative was really the AI industrial complex. But more than that was corporate earning strength overall as well as the dovish pivot from the US Federal Reserve.

So, all in all, the MSCI ACWI small cap index was up a little shy of 7%, which was actually ahead of its large and mid-cap counterpart, the MSCI ACWI, which was only up 6.4%.

Tech and AI drive performance

Moving on in terms of what drove this global small cap market within the index. From a country perspective, China was the standout up almost 24%. And really it was a lot of strength in the tech and AI industrial complex, but also obviously some signs of progress in terms of the US China trade negotiations. Other than China’s strength, what we saw notably was some strength in the United States. That country was up 8.1% helped by the fed’s rate cut during the September quarter, which provided a nice additional boost for small cap.

Canada is worth noting up 16%, a little over 16% in the September quarter. Canada was a beneficiary of some really strong commodities and precious metal tailwinds. Having that materials was actually the best performing sector within the MSCI small cap index.

On the other side, India continued to be an underperformer, was down about 8% in the September quarter, again due to some tariff pressures and really a lack of exposure to what has been driving the markets, notably AI.

From a risk perspective in the quarter, in the global market landscape, it was really risk on sentiment in global small caps, with a little bit of a low-quality tilt to it, where we saw non earners and stocks with low ROIs and high beta continue to outperform and drive the market action.

From a momentum perspective, momentum was positive in the quarter, really due to a very strong bounce back in September. So that was the general market environment in the September quarter in the global equity landscape.

Key drivers of performance

Moving on to fund performance. The fund in the September quarter gained 9.49% net of fees. That outperformed its benchmark, the MSCI ACWI small cap Index, who had about 285 basis points. So almost 300 bps of outperformance. As far as attributions concerned from a risk-based attribution, we really outperformed due to our intended and compensated exposure of informed momentum or the combination of momentum plus idiosyncratic risk.

Kratos, Bloom Energy and Credo Technology powering performance

But on top of that, we were also, exposed to volatility, which paid, and our relative industry positioning was further adding to performance. So basically, an overweight to tech and industrials was additive. But overall stock selection is what drove our outperformance, particularly in the United States. And really what happened there was a lot of strength in industrials and technology. Some notable outperformers including Kratos, which is a leading company in unmanned aerial vehicles along with Bloom Energy, which is an alternative energy company that is really powering a lot of what’s happening in the data centres, a lot of new deals with that company. And to a lesser extent, technology with Credo Technology being one of the data optics providers within the data centres here in the US and across the world.

So notable strength in the US and also positive stock selection in Taiwan. Some of the things, same themes in, in terms of the tech and AI industrial complex with King Slide Works and Elite Materials as some of the standouts.

And also, what helped from an allocation perspective in terms of our relative performance was a very strong overweight to China. Which was one of the top contributors in the September quarter.

Current Fund Positioning

As far as positioning’s concerned. And what’s changed from quarter to quarter we’re seeing in, we’ve increased our exposure in the US and Taiwan, and on the other side we’re seeing a decreased exposure to Japan, the UK and Korea.

And we always drive that allocation from the bottom up and where we’re finding the strongest trend, the strongest momentum. But that’s just where we’ve seen the biggest movements from a country perspective. From a sector perspective our exposure to technology and materials has increased while financials and consumer discretionary have decreased.

So those are the major moves from a portfolio perspective, from a country and sector perspective.

Reasons to invest in the IMC Global Small Companies Fund

Why now? We’re pretty enthusiastic in terms of global small cap for a couple reasons. I think number one is a more favorable interest rate environment globally, particularly in the US with the Fed pivot.

We saw a rate cut in September, and the market expects more rate cuts going forward, and that historically when we see interest rates decrease, has been good for small cap in general. And so that’s one reason why we’re pretty fired up in terms of the outlook for small cap globally, but also just in terms of the relative valuations and the relative underperformance that we’ve seen in small cap, particularly in the US, and we see signs of that starting to change where we’re seeing small cap actually outperform in the US over the last month and a half or so. So we’re seeing the beginnings of a trend where small cap’s actually outperforming. So, when you take the kind of cyclical interest rate moves with small cap, it’s relative undervaluation presents a good kind of powerful cocktail for perhaps some small cap outperformance. So, I think that’s why we’re fired up in terms of right now, in terms of why small cap. But again, our style and how we approach the markets in the fund is not about making predictions, it’s about following the data and letting trend and momentum really drive our allocations rather than anything from the top down.

Outlook

So, we’re always positive and confident in our ability with our process to find those trends wherever they may emanate and move the portfolio constantly to the right side of these trends as things evolve and leadership changes, which it inevitably will. Our process is designed to look at it every day and move to where we’re finding the strongest trends and away from where we’re seeing weakness. So, from that perspective, we’re evergreen, always optimistic about our process in terms of relative performance.

To find out more about the IMS Global Small Companies Fund, click HERE. Follow us on LinkedIn.

*The text has been edited for clarity.

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Disclaimer:

This fund update has been prepared by SG Hiscock & Company (SGH) to provide general information only and is not intended to take the place of professional advice. It does not take into account the investment objectives, financial situation or particular needs of any particular person.

Equity Trustees is the responsible entity for the IMC Global Small Companies Fund, Neither SGH, Equity Trustees nor any of its related parties provide any warranty of accuracy. Past performance should not be taken as an indicator of future performance. You should obtain a copy of the Product Disclosure Statement before making a decision about whether to invest in this product. Follow the link the in the description for the full disclaimer. https://sghiscock.com.au/podcast-disclosures-and-disclaimers/.