QUAERO CAPITAL is launching Quaero Capital Funds (Lux) – Quaeronaut Small & Mid Cap, a new European equity sub-fund of its Luxembourg SICAV Quaero Capital Funds (Lux). The fund will invest in European small and mid caps stocks (including Switzerland and the UK), which has traditionally been one of the most vibrant sectors of the European equity markets. Based on the “value” investment philosophy that made the flagship fund Argonaut a success, Quaeronaut offers access to a slightly larger market cap threshold than the microcaps targeted within the Argonaut investment universe. The new fund will be managed by Adrian Bignell and the Quaero Capital European investment team.
European Small & Mid Caps: a buoyant segment
European small and mid caps are a particularly interesting market segment. Indeed, they have beaten large caps in every 10-year period since 1999, whether in the down or the up years. Moreover, the time seems opportune to invest in Europe, since the Old Continent should be supported in the years to come by several promising themes, whether it be the growing needs in terms of energy infrastructures, the relocation of production in order to reduce dependence on Asia, the increasing automation of industry or the sharp increase in security budgets.
A fund managed according to a “Quality Value” style
Entrusted to Adrian Bignell, management follows a “Quality Value” investment style, based on in-depth fundamental analysis and active management. Focused on Europe (including Switzerland and the United Kingdom), it concentrates on small and medium-sized companies, with a market capitalization between EUR 1 and 10 billion. The result is a concentrated portfolio of some 40 to 50 positions, which, over time, will typically trade at a PE discount of 10% to 20% to the MSCI Europe SMISD cap index. The fund falls under the Article 8 category of the SFDR regulations.
The investment team considers environmental, social and governance analysis as a vital part of the investment process. The investment team expects the majority of the portfolio to be invested in companies that are already managed sustainably, with the remainder to be invested in companies with the potential for improvement through engagement. The team will also engage with poorly rated companies, encouraging them to improve ESG disclosure, further integrate ESG issues into governance and strategy, and set clear objectives.
A very experienced European Small & Mid Cap team
Based in London, Adrian Bignell joined the QUAERO CAPITAL European small and mid caps management team in 2021. With an average of 23 years of experience, the Quaero Capital European equity team manages several funds in this asset class, in particular the flagship fund Argonaut, which focuses exclusively on European microcaps. Thanks to an intimate knowledge of the companies it follows, the team carries out its own fundamental analysis and original research, which translates into conviction-based management, oriented on the long term and without constraints in relation to benchmark indices. As its name suggests, the new Quaeronaut fund adopts the management philosophy that makes the success of the Argonaut strategy and thus allows investors to benefit from the talent and experience of its management team.
Jean Keller, CEO of QUAERO CAPITAL comments :“This new active and concentrated strategy fits perfectly with our specialized ‘away from the crowds’ management philosophy. Despite or perhaps thanks to the current economic and geopolitical uncertainties, the moment seems particularly favorable to us. Indeed, not only are there currently many opportunities to be seized, but active management regains all its interest in an environment where interest rates are positive again and we are able to make objective relative choices once more.”