1. Newsroom
  2. The strong performance potential of Swiss small and mid-cap equities
Menu
Analisi 26.11.2021

The strong performance potential of Swiss small and mid-cap equities

The strong performance potential of Swiss small and mid-cap equities

The Swiss small- and mid-cap (also known as “SMID-cap”) universe offers a balanced and diversified exposure to companies with long-term value-creation potential. Active managers can create significant added value through a disciplined stock-selection process.


Swiss small and medium-sized listed companies have long delivered higher performances than the wider Swiss stock market index. Since 2000, the SPI Extra, the index that tracks Swiss SMID-caps, has delivered 454% in total return, compared to a 231% total return for Switzerland's wider stock index, the SPI. 

Swiss SMIDs have also proved to be resilient since the start of the pandemic. In fact, despite a bigger drawdown and a somewhat faster correction in difficult markets, the SPI Extra has recovered quickly and outperformed the SPI index by a strong margin since early 2020.

An improving value-creation profile

The strong performance of the Swiss SMID-cap segment has been driven by an improving value-creation profile, as assessed by the CFROI®1  spread (CFROI® minus the cost of capital). This measure, which enables investors to gauge a company’s value-creation ability, has shown a stronger trend for the SPI Extra than for the SPI over recent years.

The increasing integration of ESG criteria has also been an enabler of value-creation, as Swiss companies have little exposure to value-destructive industries or activities such as energy or automobiles.

Participation in post-pandemic recovery

The performance results of Swiss SMID-cap companies can also be explained by their distinctive characteristics, which are supportive of their long-term growth prospects:
 
  • Good pricing power in their respective end-markets
  • Profitable and flexible supply chains
  • Leading niche market positions
  • Strong value-added products with high margins 
  • Significant innovation 
  • Market shares in growing market segments. 
These elements should also enable Swiss SMIDs to participate significantly in the strong post-pandemic demand across many sectors, while weathering the challenges of supply chain disruptions and commodity price pressures. 
 
 

1Cash Flow Return on Investment, source Credit Suisse HOLT

READ THE FULL DOCUMENT WITH CHARTS

TAYLOR JOLIDON Eleanor.jpg
Eleanor Taylor Jolidon
Co-Head of Swiss and Global Equity
View her Linkedin profile

Kesrewani_Ariane_150x150.jpg
Ariane Kesrewani
Investment specialist
View her Linkedin profile

Expertise

Azioni globali

Investire in società con una creazione di valore superiore e sostenibile.


Altro da leggere

Analisi 12.04.2024

UBP House View - April 2024

The unexpected interest rate cut by the Swiss National Bank marks the beginning of a new cycle of global easing, paving the way for new investment opportunities in the broader market. This has bolstered the Bank’s confidence in the Swiss and UK markets, which have been lagging behind the US indices. In addition, we have locked in gains on gold, which was the top performer in March.

Analisi 05.04.2024

Private Debt: A Time-Honoured Market Perspective

Our experts explore the origins of private debt—a market with a history spanning over 4,000 years, set to provide the next wave of opportunities for investors.

Analisi 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.