DNR Capital's small-cap fund earns back-to-back recognition in 2026

Brisbane-based boutique manager DNR Capital has added another finalist nomination to a growing list of industry recognition, with its Australian Emerging Companies Fund shortlisted for Australian Small Cap Equity Fund of the Year at the Money Management Fund Manager of the Year Awards 2026, run in partnership with Lonsec.

The winners will be announced on June 26. The fund has been quietly building a strong track record since its inception in August 2018. This nomination provides further validation for an investment approach that consistently delivers in a notoriously difficult part of the market.

A track record that speaks for itself

Since inception, the DNR Capital Australian Emerging Companies Fund has delivered an annualised return of 14.75 per cent per annum net of fees, as at March 31, 2026. Its benchmark, the S&P/ASX Small Ordinaries Index, returned 10.07 per cent per annum over the same period.

The fund delivered an annualized outperformance of more than 4.5 percentage points over the period. The team sustained this outperformance across a highly turbulent cycle. It survived, and thrived through, extreme market volatility, a global pandemic, and sharp interest rate hikes.

Alongside its Highly Recommended rating from Lonsec, independent validation keeps rolling in. The fund recently earned its fourth nomination in the Australian Equities Small Cap category at the Morningstar awards. Back-to-back recognition from two of the most respected research houses in the country is not something that happens by accident.

How the fund is run

Portfolio managers Mark Sedawie and Sam Twidale run a concentrated portfolio of between 20 and 45 high-conviction positions. The investment process relies on deep valuation analysis to uncover and exploit mispriced market opportunities.

The strategy targets companies with strong earnings potential, sound balance sheets, superior industry positions and experienced management teams. It is a quality-first framework, applied with discipline across the small-cap universe where the gap between good and poor businesses tends to be widest.

“Our assessment of a company’s quality is complemented by a disciplined approach to valuations. We continue to see opportunities in the small-cap universe as market conditions evolve and earnings outlooks improve. There’s volatility, but also strong potential for alpha generation.”

Twidale is also clear about what has driven the recognition. “We are extremely proud to receive this nomination, which reflects the team’s commitment to a disciplined, quality-focused investment process,” he says.

Why small caps deserve attention right now

The small-cap segment has had a difficult few years relative to large caps. Rising rates and tighter credit pushed investors into larger, more liquid stocks. This flight to safety created a rare hunting ground. For managers with patience and a clear process, it is an ideal time to buy quality businesses below their intrinsic value.

Earnings outlooks are beginning to improve just as the interest rate cycle turns. This shift creates highly favorable conditions for small-cap alpha generation. Market conditions favor concentrated, high-conviction managers who can identify mispriced opportunities.

For advisers building or reviewing client portfolios, the small-cap allocation is worth revisiting. The asset class offers genuine diversification from large-cap Australian equities and the potential for meaningful return differentiation when the right manager is in the seat.

The track record makes the case

The fund holds a seven-year track record of benchmark outperformance and a Lonsec Highly Recommended rating. Backed by finalist nominations at two of Australia’s top award programs, this strategy belongs on every due diligence list.

For advisers who have been underweight small caps or are looking to add a quality-focused option to their approved product list, the fund’s consistent approach and independent recognition make it a straightforward starting point for further due diligence.