SUMMARY
The Fund fell 4.2% in December, underperforming the Small Industrials by 2.3% and underperforming the Small Ordinaries by 5.7%. For the 12 months to December, the Fund was up 11.5%, outperforming the Small Industrials by 2.7% and underperforming the Small Ordinaries by 13.5%.
The phenomenal rise in gold stocks during 2025 boosted the Small Ordinaries, and we remind our investors that we do not invest in mining stocks due to their elevated risk.




COMMENTARY
December saw global markets tread water, with the US market down 0.5%, and other markets relatively flat. Bond markets drifted lower on the expectation that rate cuts are less likely. Over the 12 months, the US market rose 16.4%, notwithstanding the turmoil during April surrounding US tariff policies.
Gold prices rose a further 2%, to close the year up 64%. There are many reasons for the gold price strength, including geopolitical uncertainty, marginal switching by central banks from US treasuries as US debt levels soar, lower interest rates, and lower faith in the US dollar. Silver prices also spiked 24% in December to rise 140% over 2025. We do not invest in mining companies but have exposure to the likely increase in exploration activity via holdings in Imdex and ALS Corp.
The Australian market rose 1.2% in December, with mining stocks strong, outperforming. Small-cap stocks also rose by 1.2%, again dominated by the mining sector.
Our positive contributors in December included:
Symal (+25%), an emerging construction player, rallied further following two acquisitions aimed at broadening the company’s geographic presence. MA Financial (+13%) closed the year up 78% as it continues to grow its diversified asset management operation. NZ based Channel Infrastructure (+7%) has performed well for us since investing earlier this year and rallied further after dual listing in Australia in December. Tuas (+9%) closed firmly after a sustained rally in 2025, based on its superior earnings growth driven by mobile and broadband subscriber growth in Singapore and the recent acquisition of key competitor M1. Cuscal (+11%) is growing its payment support services and remains undervalued in our view.
Our negative contributors in December included:
Generation Development (-11%) fell after the announcement of a change in the CFO, with such a retracement also best seen in the context of a 233% rise in the share price over 2025. Catapult (-23%) gave up most of the strong gains of 2025 in November and December, following a results release that showed very impressive revenue growth. However, profit growth was impeded by higher share-based payments to staff and higher depreciation. Regis Healthcare (-12%) retraced after a 30% rally over October/November, with the resignation of highly regarded CEO, Linda Mellors. Netwealth (-10%) and HUB 24 (-7%) dragged on our performance in December, with Netwealth particularly hit by a compensation payment to customers with exposure to the failed First Guardian Fund.