It will no doubt be necessary to revisit a few commonplaces on the heaven and hell of investment in Europe. In European investment paradise, debt is German, property is British and infrastructure is French. In hell, the debt is French, the infrastructure English and the real estate German.Read more
Over the weekend, a Chinese AI start-up funded by quant fund manager Liang Wenfeng released a new version of its large language model (LLM), named DeepSeek. Early reports indicate that DeepSeek’s performance is similar to that of U.S. competitors such as OpenAI and Meta.
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It’s been tough times recently for managers of small cap equities in Europe. In fact, as at the end of October no less than 80% of small cap managers have underperformed the MSCI Europe Small Cap index year-to-date. French and German managers have been particularly hard hit given their propensity to overweight their home markets, which have been amongst the worst performers (the CAC Small CS90 Index is down 10.7% and the Deutsche Börse SDAX Price Index -7.4% at the time of writing).
Painfully – and with an active share ratio of 98% – we are right in the middle of the 80% that have underperformed, and we have been looking at the data behind the movements to shed some light on why so many managers have been suffering.Read more
The start of monetary easing by the Fed is always a global event. Firstly, because of its impact on the global cycle. With more than 30% of world consumption (in dollars), US demand clearly steers the development of global demand.
Macro surprises deteriorated over the summer before stabilising in September. The slowdown in activity is most marked in the developed countries (United States, Europe) and China. Nevertheless, global growth remained at satisfactory levels, close to 3% (Purchasing Power Parity) in Q3 according to the August composite Purchasing Managers’ Index (PMI).
Europe has recently seen an acceleration in the number of companies buying in their free floats and taking the decision to “go private”.
The trend to delisting may be bad for stockmarkets in the long term, but will benefit small cap investors in the short term.
Over the last three years, we have faced growing regulation in the sustainable investment industry. More recently, this regulation has shifted from an emphasis on disclosure to more specific definitions and thresholds. We also see investors and sustainability certifications, such as the ISR Label, taking similar steps.
The fund manager of our Japanese equity fund Taiko Japan, Rupert Kimber, recently came back from a trip to Japan. Here are his notes.Read more
On a global level, macro-financial conditions in the second half of the year will be dominated by the continuation of global monetary easing.
The underperformance of Swiss small caps compared with large caps over the last 2 years has been particularly marked (see chart below).