Infinity Asset Management succeeds in the Australian Equities Small Caps category at the 2025 IMAP Managed Account Awards. Chris Adams (Infinity Asset Management) & Toby Potter (IMAP) discuss Infinity’s approach to investing.
For Infinity Asset Management — winner of the Australian Equities Small Caps category at the 2025 IMAP Managed Account Awards — the sweet spot for investing in Australian Equities small caps is in the top 50-150 range.
According to Chris Adams — Portfolio Manager at Infinity Asset Management — this range has enough efficiently managed liquid stocks from which to choose. However, he believes once you go outside the top 200, managers can start to struggle with liquidity.
By Jayson Forrest
There’s been a dearth of IPOs for some time now, and the ones we have seen haven’t been of the greatest quality. But by sticking to our stock selection process, we know there are still some decent returns available in the market
“There are a couple of key principles behind our stock selection process,” says Chris. “We require companies to have earnings growth, and we like to see a strong and growing earnings track record. The quality of the management team is also important.”
The investment objectives of Infinity’s SMID Australian Equity Fund is to deliver outperformance of the benchmark (S&P/ASX Mid Small Cap Total Return Index) over a rolling three-year period, with the portfolio generally holding 20-25 companies. The fund — available through BT Panorama, HUB24, Netwealth, and CFS Edge — has a minimum investment horizon of 5-7 years.
Yet, despite a noticeable reduction in the number of companies publicly listing year-on-year, Chris isn’t too fazed about the dwindling supply of good quality small and mid-sized companies.
“There’s been a dearth of IPOs for some time now, and the ones we have seen haven’t been of the greatest quality,” says Chris. “But by sticking to our stock selection process, we know there are still some decent returns available in the market.”
When looking at companies, Infinity is not a top-down, macro stock picker. Instead, it divides the universe into about six major buckets — like resources, growth, value, technology, and interest-rate sensitive — and then tries to “pick the teeth out of these”.
“We try and get a broad representation in these buckets, without being rigidly close to the benchmark, and also having a GARP (growth at a reasonable price) bias. GARP favours investing in companies with consistent earnings growth, reasonable valuation, and solid financial strength, combined with strong profitability.”
As an example, Infinity owns Vault Minerals, which is a mid-tier gold producer with a diversified portfolio, strong financial capacity, and a proven track record of sustainable growth. It’s a value proposition that is attractive for Infinity.
“So, when selecting stocks, we try to ‘pick the teeth’ out of these big buckets, which includes considering the effects of higher beta and higher PE ratios on the whole structure,” says Chris.
We don’t go in for developers or greenfield explorers. Nine times out of 10 they come unstuck. For example, consider the trouble CSL — Australia’s biggest biotech player — has had with its biotech portfolio, and you can see what a tough space this is to consistently generate returns
Investment considerations
While Infinity doesn’t rule out any sectors in which to invest in small to mid-caps, there are certain industries, like biotech, as well as military stocks like Codan and Austal, that it avoids.
“We don’t go in for developers or greenfield explorers. Nine times out of 10 they come unstuck. For example, consider the trouble CSL — Australia’s biggest biotech player — has had with its biotech portfolio, and you can see what a tough space this is to consistently generate returns,” Chris says.
“Instead, we tend to stick to ‘bread and butter’ type stocks, and while we don’t ignore valuations, we recognise that in some of these higher growth sectors, you’ve got to be prepared for some rather juicy valuations from time to time.”
Not surprisingly, Chris believes small caps can play an important role in an investor’s broader portfolio. He says the attraction in small caps — whether it’s Australian or global — is the alpha, value-add component.
“You can get a meaningful return with small caps, regardless of what the market is doing,” he says. “That’s because you’ve got far more choice. For gold producers alone, there are 10-12 companies you can pick from, whereas with the large caps, investors are basically stuck with BHP and Rio Tinto. So, we believe you can build a far more compelling portfolio from a number of junior players in the market.”
You can get a meaningful return with small caps, regardless of what the market is doing. That’s because you’ve got far more choice. For gold producers alone, there are 10-12 companies you can pick from, whereas with the large caps, investors are basically stuck with BHP and Rio Tinto. So, we believe you can build a far more compelling portfolio from a number of junior players in the market
Delivering on criteria
In congratulating Infinity Asset Management on taking out the Australian Equities Small Caps category, Toby Potter — Chair of IMAP — says the IMAP Awards judges were pleased with the overall quality of entries. He says the judging panel were looking at managers that were able to take advantage of the opportunities that only a couple of hundred stocks in the Australian market could offer.
“The judges were also looking for a coherent investment philosophy, an investment process that could be clearly articulated to clients, and a performance track record of delivering returns to investors,” says Toby. “Infinity was able to deliver on all criteria.”
According to Toby, managed accounts have become one of the fastest growing parts of the advice profession, because they provide advisers and licensees with a superior way of delivering better client outcomes that more closely align with client goals.
“We are seeing continued evolution of the technology and portfolio management capability in managed accounts,” he says. “We had more entrants this year in these awards, and a wider variety of portfolios. We are demanding ever higher standards of ourselves as a profession and this is reflected in the standard of portfolio management from the asset consultants, investment teams and the advisers who connect these capabilities to each client’s own circumstances.”
Toby adds the IMAP Managed Account Awards are only possible due to the commitment of the judges who dedicated considerable time and their professional expertise in assessing the many entries in these awards.
This year’s judges’ panel comprised of:
- Deanne Baker — Deputy Chief Investment Strategist at Evidentia;
- Brad Matthews — Founding Director at Brad Matthews Investment Strategies;
- Dominic McCormick — Industry Consultant;
- Nigel Douglas — Principal of Douglas Funds Consulting;
- Rob da Silva — Head of Research at Foresight Analytics;
- Chetan Trehan — Sector Head Real Assets, Alternatives and Multi-Asset Funds at SQM Research; and
- Toby Potter — Chair of IMAP and Executive Director of Philo Capital Advisers.