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Stepping up in small-caps: Europe’s most improved managers

Stepping up in small-caps: Europe’s most improved managers

The supposed lack of lending from European banks to small- and medium-sized companies in the region over recent years has been a major bone of contention for market commentators.

As ECB-led policy has largely been aimed at improving this transaction mechanism, there are concerned voices that little money is being transferred from banks to smaller firms.

With the onset of the major bond-buying programme in January, there is a suggestion this cash could finally find its way off bank’s balance sheets and into growing firms.

Against this backdrop, Citywire Global has assessed the European equity small- and mid-cap sector to find the fund managers posting the most improved performance over the past two years.

This compares the performance over the 12 month periods April 2013-April 2014 and April 2014-April 2015, with a quartet of sector specialists making huge strides up the rankings between the two analysis periods.

Let’s take a closer look at the fund managers who have risen more than 100 places up the sector rankings during this timeframe.

Geoffroy Goenen/Anne-Catherine Delaye, Candriam

Fund: Candriam Equities B Europe Small & Mid Caps C Cap

  • First analysis period (April 2013-April 2014): 119/149
  • Second analysis period (April 2014-April 2015): 3/154

Boasting an improvement of 116 rankings places between the two periods of analysis, the Candriam pair of Geoffroy Goenen and Anne-Catherine Delaye are ranked third in the sector for their performance over the past 12 months.

Goenen, who is Citywire + rated, and Delaye, who is Citywire A-rated, were assigned to the Belgium-domiciled fund in November 2011. The €239 million fund has 32% exposure to the UK, while Germany (14.7%) and France (13.9%) are also well-represented.

On a sector basis, the duo has focused primarily on industrials (25%), financials (21.4%) and consumer discretionary (20.4%) sectors. This is while holding Yoox, an Italian internet retailer, as the largest single position in the fund.

Pascal Riégis, Oddo AM

Funds: Oddo Avenir Europe A/Oddo Equity Europe Avenir RDR CN-GBP/Oddo Funds - Oddo Equity Europe Avenir CI-USD

  • First analysis period (April 2013-April 2014): 126/149
  • Second analysis period (April 2014-April 2015): 6/154

Completing something of a full turnaround is former Citywire AAA-rated small-cap specialist Pascal Riégis. The Paris-based investor was the subject of Citywire Global magazine’s Performance Clinic feature in July 2014 after what he called ‘the longest period of underperformance’ he had experienced.

While running three funds at French asset manager Oddo, Riégis has emerged from the lowest quartile of performers in his sector to sit just outside the top five based on his 12 month performance. This is an increase of 120 ranking spots between the two timeframes.

Speaking earlier this year, Riégis said his conviction on core Europe had been a major factor in this turnaround. This had seen him increase allocations to Germany and France, while reducing more peripheral exposures, such as Spain.

Markus Rüegsegger, Quantex

Fund: Quantex Nebenwerte Fonds R

  • First analysis period (April 2013-April 2014): 146/149
  • Second analysis period (April 2014-April 2015): 19/154

Outstripping even the outstanding turnaround of Riégis is Markus Rüegsegger of Swiss group Quantex. His small- and mid-cap fund, which is domiciled in Switzerland, has risen from among the very bottom of the sector rankings to the top 20 over the past 12 months.

The CHF 42 million (€40 million) fund is primarily exposed to mid-cap companies, which make up 45% of the exposure in cap size. This is while industrials account for one-fifth of the overall sector allocation and around 16% is currently held in cash.

On a two year basis, Rüegsegger trailed the average manager in the sector, having returned 37.1% against a 45.5% return by the average peer. Over the shorter timeframe, Rüegsegger returned 25.37%, which is seven percentage points ahead of the sector average.

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