WAM Microcap (WMI) H2 2025 earnings summary

Executive summary

• All funds outperformed their benchmarks in FY2025, with WAM Capital and WAM Research exceeding the Ordinaries Index by 9% and 9.2%, and the Small Ordinaries Index by 9.9% and 10.1%.

• WAM Microcap outperformed the Small Ordinaries Index by 6.5%; WAM Active delivered a 26.4% portfolio return.

• The investment process remains focused on undervalued growth companies with catalysts for re-rating.

• The team is optimistic about small-cap outperformance, citing early signs of a rotation driven by RBA rate cuts and improved economic outlook.

• Portfolio positioning is overweight in consumer discretionary, tech, and domestically focused companies.

Financial highlights

• WAM Active returned 26.4% for the year; strong dividend yields across all LICs (9–11% grossed-up).

• WAM Capital and WAM Research maintained partially franked dividends (~50%), with progress on rebuilding franking credits.

• WAM Microcap started FY2026 positively, with WAM Active up 18.1% in the first two months.

Outlook and guidance

• Positive outlook for small caps, expecting continued outperformance as interest rates fall and economic indicators improve.

• Cash levels at 12% provide flexibility for new opportunities; deal and IPO activity is accelerating.

• Small caps seen as attractively valued relative to large caps, with stronger earnings momentum.

• Guidance for maintaining current dividend levels requires ~15% pre-fee returns annually.