1. Newsroom
  2. Generating consistent returns with SMID caps
Menu
Expertise 10.05.2023

Generating consistent returns with SMID caps

 Generating consistent returns with SMID caps

In our latest podcast, our investment specialist and fund selector Cédric Le Berre talks with Ned Bell, CIO of Bell Asset Management, about the benefits of partnering with UBP and the momentum he sees in global small and mid-cap equities.


It has been three years since UBP entered into a strategic partnership with Bell Asset Management, a leading Australia-based global all-cap and small- and mid-cap (SMID) equity manager. “Our partnership was really built on the idea of having a mutually beneficial relationship between UBP and Bell,” recalls Ned Bell. Through this partnership, UBP’s flagship investment solutions range, which encompasses, among other segments, fixed income, hedge funds, private markets, and ESG and impact investing solutions, is marketed in Australia. In return, the partnership enables UBP’s clients to access a world-class equity specialist with a twenty-year track record of consistently delivering alpha across a range of market conditions and cycles.

A great opportunity to explore

“In essence, Bell AM has been built on the idea that quality investing is the best way to generate the most consistent excess returns over time. We are always trying to outperform, irrespective of market conditions.”

 “SMID investing has been a really important part of our journey. We think it is a great opportunity for investors to explore. As fundamental, bottom-up investors with a quality focus, we are very research-intensive and spend a lot of time meeting with companies,” he adds. Bell AM not only invests in quality companies, but it also has a very strong valuation discipline. The firm acts as a very long-term shareholder: stocks are normally held in portfolios for 10–15 years.

A positive backdrop for quality investing

According to Bell, after years of undisciplined capital allocation, the new market regime with rising costs of capital and greater volatility has created a very positive backdrop for quality investing. “From our perspective, inflation is very sticky. The Fed and other central banks are having a very difficult time fighting inflation, mainly because of the structural nature of the labour market; there’s a shortage of labour, particularly in the United States. If you buy into the idea that inflation will remain relatively elevated for the next 2–3 years, which is our view, then you should focus on the quality factor. Our analysis shows that it consistently outperforms in periods of high inflation,” he stresses.

Well-equipped to withstand inflation

Ned Bell and Cédric Le Berre also discuss the fact that SMID caps are well positioned to benefit from the high interest rate environment both from a valuation perspective, as they are trading at a ten-year low, and a fundamental perspective. “During Covid, SMID companies had to reduce the costs of their operations considerably because they had to adapt very quickly to changing economic dynamics, unlike large, more bureaucratic companies. The net effect of that is they are now well-equipped to withstand inflationary pressure,” notes Bell.

Headphones on to listen to the podcast!

Listen and subscribe to our podcasts on these platforms:
spotify.png  apple-podcast.png  Google-podcast.png


Cédric Le Berre Cédric Le Berre
Senior Investment Specialist
VOIR PROFIL LINKEDIN
Expertise

Actions globales

Investir dans des sociétés affichant un profil de création de valeur supérieur et pérenne.


A lire également

Expertise 27.03.2024

Four reasons to consider global SMID caps in 2024

As the “Magnificent 7” generate risks in the segment, diversification within equities becomes key. Global small- and mid-cap (SMID) stocks, represented by the MSCI World SMID Cap Index, are emerging as a compelling option.

Expertise 14.03.2024

India: A New Driver Emerges

Driven by Prime Minister Narendra Modi’s economic programme, India has embarked on a phase of infrastructure investment akin to China’s in the 1990s. In our latest edition of UBP Headlines, our Group Chief Strategist Norman Villamin takes a deep dive into the booming Indian market, exploring its investment opportunities.

Expertise 12.03.2024

Why Swiss equities should be considered in every equity allocation in 2024

Investors may find the strong fundamentals and stable economic, political and social aspects of Switzerland attractive in terms of equity investments in a year which may be dominated by geopolitical newsflow.