Most relevant for MNB from the AFR article below is this part;

"Ms Swanson said small-cap resource stocks was one area of the sharemarket that looked interesting.“It’s probably the worst performing sector in the small-cap market over the last 12 months. So we do think you want that exposure as we start to look forward,” she said.“Now commodity prices are starting to recover, we’re seeing really interesting opportunities.”

‘Don’t wait until it’s too late,’ warn ASX small-cap managers

Jul 25, 2024 – 1.51pm

"Australian fund managers say investors should be piling into ASX-listed small caps before the Reserve Bank of Australia starts cutting rates that will buoy the smaller end of the sharemarket.The calls come as the bull run in the US tech giants, which has driven global equity returns for the last 18 months, comes under further pressure as investors ditch the large caps for US small- and mid-cap stocks.
The S&P 500 Index slid 2.3 per cent overnight on Wednesday – its biggest drop since December 2022, while the tech-heavy Nasdaq 100 tumbled over 3.5 per cent to a six-week low, following lacklustre earnings from both Tesla and Alphabet.

Investors had already been repositioning portfolios in anticipation that the US Federal Reserve could kick off its rate cutting cycle by September, which would come as a relief to smaller indebted companies whose shares have lagged their larger counterparts.

Fidelity Australia’s cross asset specialist, Lukasz de Pourbaix, said this week that signs of the US central bank nearing rate cuts had prompted investors to pull money out of the large caps and invest in the less loved areas of the sharemarket.
“The market has got a little bit more confidence that we may see rate cuts and that the inflation journey in the US is under control,” he said.“So we’re seeing the market rotating out of those mega caps, which are considered the safer parts of the market, as it now has a bit more confidence to go down the market cap spectrum.”
The strong investor flows have not, however, extended to the Australian sharemarket with the S&P/ASX Small Ordinaries Index lagging the large cap S&P/ASX 50 in recent weeks.
Still lagging
That underperformance has been attributed, in part, to the likely delay in the Reserve Bank of Australia cutting rates compared to the Fed. However, speaking at an event in Sydney on Wednesday, Firetrail Investment portfolio manager Eleanor Swanson said investors shouldn’t wait.“Small caps tend to run six to nine months before we see economy troughs, and we all know that it’s pretty tough in Australia, particularly for consumers.” she said.“But the minute we get a sign that the RBA is cutting … it’s already too late to wade into small cap equities. You really need to be there before the economy troughs.”Bond traders are currently pricing in around a 20 per cent chance that the RBA will raise interest rates next month to 4.6 per cent, and a 26 per cent probability by September."

"Ms Swanson said small-cap resource stocks was one area of the sharemarket that looked interesting.“It’s probably the worst performing sector in the small-cap market over the last 12 months. So we do think you want that exposure as we start to look forward,” she said.“Now commodity prices are starting to recover, we’re seeing really interesting opportunities.”

The rest of the article is here;

https://www.copyright link/markets/equity-markets/don-t-wait-until-it-s-too-late-warn-asx-small-cap-managers-20240725-p5jwf8