In a world gone mad, it’s all about earnings growth for Catriona Burns

Please note this interview was recorded Wednesday 4 February 2026

Markets have a habit of testing investors’ conviction, and the past six months have been a case in point. Share prices have often moved on factor rotations, narratives, and momentum rather than fundamentals, leaving many high-quality businesses sold off despite delivering strong underlying results. For investors trying to look through the noise, that has created both frustration and opportunity.

Few managers have been as explicit about where they see the market ultimately heading as Catriona Burns, Lead Portfolio Manager of the WAM Global Fund. With more than two decades of experience across Australian and global equities, Burns has spent recent months leaning back into first principles: over time, earnings growth matters most.

In this conversation, we discussed why the market has become so disconnected from fundamentals, what that means for portfolio construction in 2026, and where she is finding opportunities amid indiscriminate selling, particularly across software, healthcare, and infrastructure.

As Burns puts it:

“I think you’ve got to concentrate and focus on earnings growth. Eventually, we will get to a point where the market refocuses on earnings. And if a company can consistently grow and compound earnings, and it has a rational management team that is even taking advantage, like doing buybacks into current weakness, then ultimately earnings will drive share prices.”

That philosophy underpins how she is positioning the portfolio today and the stocks she believes are best placed when the market’s attention returns to fundamentals. For the full experience, watch the video above. You can also read a summary below.

INTERVIEW SUMMARY

Earnings over factors: Why fundamentals still matter

Burns argues that recent market behaviour has been unusually disconnected from earnings outcomes. Despite solid reporting numbers for many businesses, share prices have often moved in the opposite direction.

“It was very much factor-led rather than earnings-led. You had companies where the earnings were actually very strong, but they were sold off indiscriminately just because they were in the wrong area.”

She notes that unprofitable companies have outperformed profitable ones, while momentum and volatility have dominated returns. In her view, this has created fertile ground for long-term investors who remain disciplined.

“None of that has really mattered very much in the last six to nine months, but I think ultimately staying true to your process and finding high quality businesses ultimately is the key.”

The macro backdrop: Supportive, but with risks beneath the surface

While acknowledging persistent risks, Burns sees the broader macro environment as supportive for equities, particularly in the US.

“The backdrop for US for economic growth actually still remains pretty solid. So that’s a good backdrop for equities.”

She highlights potential US rate cuts, ongoing fiscal support ahead of midterm elections, and resilient economic data as key positives. Europe, while facing slower growth, is also presenting pockets of opportunity linked to infrastructure and defence spending.

That said, Burns is careful to stress that headline indices may mask significant dispersion underneath.

“It’ll be more interesting what happens below the surface than the headline.”

Inflation and quality: The key risk to watch

Inflation remains the central swing factor for markets in 2026. Burns believes any upside surprise could quickly change which stocks lead.

“If you saw inflation tick up, quality stocks have been under pressure. And you would, under that scenario, be very likely to see a move back to companies that have pricing power.”

For her, this reinforces the importance of owning businesses with durable earnings, strong industry positions, and the ability to protect margins.

Portfolio positioning: Diversified, but deliberately selective

The WAM Global portfolio is diversified across high-quality businesses, but Burns avoids areas where outcomes are dominated by uncontrollable macro variables.

“We don’t tend to invest in biotechs or resources companies where the company can’t control the macro and a commodity price.”

Instead, the portfolio leans into business services, healthcare, selected software and hardware exposure, and infrastructure-linked names. Burns also sees opportunity in areas the market has aggressively de-rated.

“We’re seeing a lot of opportunities from that 'throw the baby out with the bathwater' attitude.”

Stocks in focus: Thermo Fisher, Quanta Services, and Scout24

Among key contributors, Burns highlights Thermo Fisher Scientific (NYSE: TMO), describing it as a classic picks-and-shovels provider to healthcare and life sciences.

“They don’t care which biotech or which large pharma company wins. They just sell to everyone.”

After working through COVID-related volatility and inventory overhangs, Burns believes the company is well placed as AI accelerates innovation in genetic sequencing, disease identification, and drug development.

Another long-term holding is Quanta Services (NYSE: PWR), which operates in US transmission and grid upgrades.

“What is already a great underlying story in terms of upgrading the US grid has now been overlaid with AI demand and bringing data centres on.”

Burns also points to new additions in the sold-off software space, including Scout24 (ETR: G24), the German equivalent of REA Group.

“These are dominant marketplace businesses with strong earnings growth potential as they add on incremental products and continue to premiumise.”

Advice for investors: Stay focused and be opportunistic

Burns’ advice for investors navigating 2026 is simple, but not easy to follow in volatile markets.

“Eventually, we will get back to a focus on earnings driving share prices.”

She encourages investors to be patient, opportunistic, and confident in businesses with visible earnings growth and rational capital management.

“If you’ve got confidence in the earnings of a business over time, that’s where the opportunity lies.”