The multiple macro and geopolitical headwinds faced by Europe since 2020 have resulted in a challenged returns landscape. Many investors have to structurally allocate to the region, yet large-caps have delivered disappointing performance versus their US counterparts.
But as headwinds abate, there is now a compelling return proposition in Europe's equity markets. We believe the best way to allocate for hard-working equity exposure in Europe is to journey down the capital structure to focus on small and mid cap (SMID) opportunities.
Europe's SMID market boasts numerous highly innovative companies run by exceptional management teams, yet they fly under the radar of most mainstream investors. Many are leaders in niche markets and generate global revenue streams, insulating them from much of Europe's macro noise and idiosyncratic risks.
We believe Europe offers an attractive equity proposition, if you know where to look.
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Why small is beautiful
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