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Geneva boutique names new Swiss picks in European fund

Geneva boutique names new Swiss picks in European fund

Geneva-based asset management boutique Quaero Capital is pouncing on new opportunities in Swiss equities for its flagship European small-caps fund, with the region offering attractive prices.

The Citywire AA-rated managers of the Quaero Capital Smaller European Companies fund, Philip Best and Marc St John Webb, have added three Swiss stocks to the portfolio.

The added names are private bank EFG International, high-precision machining company Tornos and composite materials specialist Gurit. The total country allocation for Switzerland in the European equity fund stood at 14.5% at the end of February.

Floating to the top

Elsewhere, Spanish swimming pool equipment maker Fluidra has been strong contributor to the fund’s performance, as it recouped all its January losses with a 10% rise in February after the company published a 29% rise in profits for last year, the managers explained.

‘The share will enjoy strong dynamics over the next two years as it becomes world leader with the transformational acquisition of US peer Zodiac, generating substantial synergies and driving profit growth,’ they said.

The company’s growth spurt could attract more institutional investor interest, Best and St John Webb explained, as it has grown from a relatively unknown and illiquid small family-owned company to a €2 billion market cap.

Inflation concerns

‘After a series of positive economic indicators, the European Smaller Companies strategy has been affected by signs of incipient inflation,’ Best and St John Webb warned.

The strategy’s second largest holding, German roadbuilding equipment maker Wacker Neuson, and German foundations services supplier Bauer are among the stocks hit, they said. Even so, the managers continue to maintain their conviction in the two companies.

Swiss digital security company Kudelski has been another of the portfolio’s biggest detractors, as it fell 13% after publishing disappointing results for the year. However, the managers continue to see value in the company.

Over three years to the end of February 2018, the Quaero Capital Smaller Companies D EUR Cap fund returned 69.41% in CHF terms while the Citywire-assigned benchmark MSCI EMU Small Cap TR EUR rose 50.92% over the same period of time.

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