The underperformance of Swiss small caps compared with large caps over the last 2 years has been particularly marked (see chart below).
Where are Swiss small caps headed?
![](https://quaerocapital.com/wp-content/uploads/Newsletter-June-3-swiss-small-and-mid-630x225.jpg)
The underperformance of Swiss small caps compared with large caps over the last 2 years has been particularly marked (see chart below).
The capitulation point in small caps may have passed… and the tide seems to be turning.
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This questionnaire is inspired by Proust’s famous questionnaire…
My ears and my eyes…
Two years ago, Philip Best and Marc Saint John Webb illustrated their investment approach to minority investing by reference to the theme of how ‘constructive engagement’ with smaller listed companies could accelerate returns and reduce risk. This approach to investing in ‘small caps’ was compared to Private Equity minority investing in ‘midmarket’ companies.
The year 2023 saw significant stock market gains worldwide, but for anyone investing in European Small/Micro-cap, an invitation to the party was notably absent. Why bother trying to identify winners from thousands of small-cap stocks when you can simply invest in a few of the largest, best-known companies globally and achieve better returns?
Over the 20-year history of the Quaero Capital Funds (Lux) – Argonaut fund (the Fund), we have adhered to our investment philosophy and fundamentals/value approach of investing in good companies at great prices. Our investment process is based on primary research, which is necessary for investment in smaller companies that communicate less and have limited coverage by brokers. Over the years, we develop an intimate knowledge of the companies we invest in.
For the past 6 months, European small caps have no longer been underperforming large caps, after a very difficult 2022 and start to 2023.
The year 2023 saw significant stock market gains worldwide, but for anyone investing in European Small/Micro-cap, an invitation to the party was notably absent. Why bother trying to identify winners from thousands of small-cap stocks when you can simply invest in a few of the largest, best-known companies globally and achieve better returns?
Little followed by analysts and little known by investors, European small caps are undervalued, despite their superior growth prospects. And while the last two years have hardly been kind to them, now seems a particularly good time to enter this market.