Australia’s leading fund managers are actively seeking value in sectors that fell out of favour last financial year, particularly technology and healthcare, believing many stocks were unfairly punished amid market volatility. The ASX technology sector, in particular, has become a popular hunting ground following a sharp sell-off in the March quarter, driven by fears that artificial intelligence advancements could displace traditional software businesses.
Forager’s Australian Shares Fund, led by Chief Investment Officer Steve Johnson, has significantly reduced its cash holdings from 20 per cent to around 5 per cent, making substantial bets on companies perceived as “AI losers.” Johnson believes the market has overreacted, making some companies appear very cheap. Forager recently acquired Gentrack, a utilities software developer, and increased its positions in sports tech provider Catapult and financial services software business Bravura. Similarly, Airlie Funds Management has broadened its technology exposure, adding Life360, Xero, and Carsales while divesting CSL and Charter Hall. The out-of-favour healthcare sector is also attracting attention, with Merlon Capital initiating positions in Cochlear, a global medical device company, and ResMed, a leader in cloud-connected medical devices, and doubling down on CSL, a global biotechnology company.
Despite the consumer discretionary sector being impacted by Reserve Bank of Australia interest rate hikes, some investors are cautiously re-entering the space. Glenmore Asset Management’s Robert Gregory suggests positioning in these stocks before the end of the RBA’s hiking cycle, adding Universal Store to his fund. Tamim Asset Management’s Ron Shamgar echoed this sentiment, buying Accent Group, Skin Candy, and Kogan.com, anticipating a significant re-rating by the time the RBA cuts rates. In contrast, Centennial Asset Management remains underweight consumer-sensitive stocks, with Portfolio Manager Matthew Kidman expecting further corrections in the upcoming August reporting season. Centennial is instead prioritising companies exposed to capital expenditure booms, such as electrical services companies SKS Technologies and Southern Cross Electrical Engineering.
