How to choose excellent fund managers

David Cassidy: Yes, we do think that. If you look at it a little bit more on a short-term timeframe, the Aussie small-cap index has outperformed the large-cap index over the last six or so months, not by a lot, but there's a bit of a bottoming process happening there. So, notionally smalls have done a little bit better than larges on a six-month view. David Cassidy: Not so much from a timing perspective, but certainly, valuations both here and globally favour small caps. That's not necessarily a great timing tool, but it's nice to have up your sleeve. I think if you look at the history of rate cuts and small-cap performance, that's typically a positive signal for improving small-cap performance, particularly if it ultimately generates better economic growth both globally and domestically, and that's our base case. David Cassidy: We'd probably be a little bit cautious on tech, just to the extent that's been the story that's driven the large caps. Perhaps some of the more cyclical areas of the market that have done less well should do better under the backdrop of rate cuts, so possibly those neglected cyclical areas. Even small-cap resources that have been on the nose in recent times, I think, are looking interesting as a bit of a contrarian play.
David Cassidy: For smalls, we typically have the view that you want to be very active. Even though I've spoken about a better environment for small caps, in a general sense, I do think small caps are an alpha market more so than a beta market. Particularly in Australia, when you look at the small-cap benchmark, look at the long-term performance, it's fairly uninspiring. It's better globally. David Cassidy: I don't think it's that different to picking a large-cap manager. We often talk about the three Ps: Performance, Process, and People. We look for a track record - a relatively consistent track record over a relatively long period of time. We look at the process. Do we understand the process? Does it make sense? Is it logical? And are we comfortable with the people? Are there people who've generated the performance historically? From that perspective, that's an important point for us as well. Ally Selby: Thank you so much for your time today, David. It was awesome to have you on The Pitch.

David Cassidy: Thank you.

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