Opportunities outside ASX20 underpinned by ‘structural themes’

Yasmine Raso

Senior Journalist

9 July 2026

At the same time as investors continue to pour into Australia’s largest listed companies, a specialist investment manager has pointed to more attractive opportunities underpinned by solid structural themes that lie beyond the ASX 20.

According to two portfolio managers from Ellerston Capital, themes such as artificial intelligence (AI) infrastructure, electrification and digital infrastructure are all boosting earnings growth in businesses placed outside the exchange’s top 20 most-valued companies.

James Barker and Jack Briggs, Portfolio Managers of the Ellerston Australian Micro Cap Fund and Ellerston Australian Emerging Leaders Fund respectively, both said the opportunity comes at a prime time where local economic growth forecasts remain uncertain and investors are in search of untapped sources of sustained earnings growth.

“The businesses building the infrastructure behind AI are where we’re finding some of the most exciting opportunities locally,” Barker said.

“Investors can gain very little exposure to these themes through the S&P/ASX 20. Many of the companies benefiting most from these structural shifts are operating in the micro and small-cap universe.

“Companies including SKS Technologies, Mayfield Group Holdings, Southern Cross Electrical Engineering and GenusPlus Group have all benefited from increasing investment in hyperscale data centres, power infrastructure and electrical networks.

“Order books across many of these businesses have expanded significantly, providing greater earnings visibility than has historically been available in the sector.

“The market is still underestimating the duration of this investment cycle. We’re seeing project pipelines extending into 2028 and 2029, which gives these businesses far stronger revenue visibility than they had only a few years ago.”

Barker said Ellerston Capital’s flagship “research-intensive, bottom-up approach” allows them to discover oppportunities in Australia’s “under-researched” micro and small cap space.

“We’ve deliberately built these funds around investment performance rather than gathering assets under management,” he said.

“Being capacity constrained allows us to invest in businesses much earlier in their growth journey and build meaningful positions before they become too large for many institutional investors.

“Our investment process starts with identifying quality businesses,” Briggs said.

“If the fundamentals change, we’ll adjust our portfolio accordingly.”

Barker also noted that besides long-term themes investors could find opportunities in sectors that “have recently fallen out of favour”, with industrials, certain financials and consumer discretionary businesses all seeing meaningful valuation compression after the recent set of interest rate hikes, which only contributes to the case for Australian micro and small caps.

“Investors looking beyond the ASX 20 aren’t simply buying smaller companies. They’re accessing businesses exposed to some of the fastest-growing parts of the Australian economy,” he said.

“For active investors prepared to do the research, that’s where we believe many of Australia’s future market leaders will be found.”