Equity

A timely opportunity for US small and mid-caps

Back to all

After several years of underperformance relative to large caps, US small and mid-cap equities are trading at historically attractive valuations. This valuation gap, which has reached levels last seen in the early 2000s, presents a compelling entry point for long-term investors.

Despite recent disruption caused by the Iran conflict, US small and mid-cap companies are currently supported by a combination of favourable macroeconomic and policy factors. The US economy continues to benefit from fiscal stimulus, supporting earnings per share growth, while these companies also benefit from strong secular trends like reshoring and reindustrialisation. Additionally, any potential Fed rate cut would likely benefit US small and mid-caps, given their higher financing needs and debt levels.

US small and mid-cap companies are also innovative, tending to invest more heavily in their future development than their larger counterparts, excluding the Magnificent 7. This investment is likely to fuel future growth while AI could possibly act as a powerful productivity accelerator for smaller firms.

Indosuez America Small & Mid Caps seeks to capture these opportunities using a research-driven quantamental process which combines the rigour of quantitative analysis alongside the deep knowledge of fundamental analysis and the flexibility of active management. The process relies on data driven insights and scoring tools to identify investment opportunities while also incorporating in-depth company analysis to validate the investment case. The approach aims to enhance objectivity, discipline and robustness in the investment process, and the fund is managed by a team of highly experienced portfolio managers.

This disciplined approach translates into a strong quality bias, with a clear focus on profitable companies offering solid balance sheets and earnings visibility, which is a key driver of long-term performance.

The fund is structured around four long-term investment themes designed to capture secular growth trends: Disruptive Technology, Next Gen, Environmental Focus and Silver Age. These themes are implemented across different segments of the value chain, with the objective of identifying the next rising stars.

The fund managers are responsible for portfolio construction, including sector allocation and risk control.

With the aim of achieving a return and/or long-term capital growth via a portfolio primarily comprising the equities of US small and mid-cap companies, this article 8 SFDR fund has a flexible investment policy. The fund is primarily invested in shares, but it may also invest in options, futures and cash. The fund seeks to outperform the Russell 2000 Net Total Return Index, which it uses as a benchmark.

While we closely monitor the portfolio to manage risk, the risk indicator for this fund is 5 (on a scale of 1 to 7), and additional significant risks for this product not taken into account in this indicator include concentration risk, risk linked to the use of derivatives, liquidity risk, risks linked to small-cap holdings and the impact of hedging techniques and sustainability risk. Please see the fund's KID for more information.

In summary, the Indosuez America Small & Mid Caps' disciplined quantamental approach is well placed to take advantage of the current supportive conditions favouring these companies.

Disclaimer

Degroof Petercam Asset Management SA/NV (DPAM) l rue Guimard 18, 1040 Brussels, Belgium l RPM/RPR Brussels l TVA BE 0886 223 276 l

This is a marketing communication. This document may not be distributed to retail investors and the use is restricted to professional investors.

Degroof Petercam Asset Management (‘DPAM’) is the author of the present document. Although this document and its content were prepared with due care and are based on sources and/or third-party data providers which DPAM deems reliable, they are provided ‘as is’ without any warranty of any kind, either express or implied. Neither DPAM nor it sources and third-party providers guarantee the correctness, the completeness, reliability, timeliness, availability, merchantability, or fitness for a particular purpose.

Before making any investment decision, you must read the current prospectus, the Key Investor Information Document ("PRIPS KID"), and the latest annual and semi-annual reports. The documents are available on request and without charge from the Management Company CA Indosuez Fund Solutions, 12 Rue Eugène Ruppert, L-2453 Luxembourg, Tel: +352 26 86 69, as well as at www.fundinfo.com.

This document is a marketing document concerning Indosuez Funds, a Luxembourg-registered Investment Company with Variable Capital ("SICAV") in accordance with the Luxembourg law of 10 August 1915 on commercial companies and UCITS, compliant with the European Directive 2009/65/EC, as amended and supplemented, and compliant with part I of the Luxembourg law of 17 December 2010 on collective investment undertakings as amended (the "2010 Law"). The SICAV is registered with the Luxembourg Trade and Companies Register under number B 166912. This marketing document concerns one of the Funds of Indosuez Funds (jointly called the "Fund"). This document is intended for promotional purposes only. The information and opinions contained in this document do not constitute a personal or general recommendation and cannot be construed as investment, legal, tax, audit or any other form of professional advice. Under no circumstances does this document state that an investment or strategy is suitable or appropriate for any particular situation or for your risk profile. As with all investments, investments in investment funds are subject to market, political, credit, economic, exchange rate and pricing risks. The Fund unit prices and incomes fluctuate and cannot be guaranteed. Investment costs impact actual performance. Achievement of investment targets cannot be guaranteed. All information, prices, market valuations and calculations given in this document may change without notice.

The Fund is licensed by the Commission de Surveillance du Secteur Financier (CSSF) pursuant to chapter 15 of the 2010 Law.

You may access a summary of your rights concerning European and national class actions in the event of litigation. This summary is available without charge at the following link: ca-indosuez-fundsolutions.com The management company may decide at any time to discontinue the marketing of the Fund in your country. This document cannot be photocopied, reproduced or distributed in all or any part or in any way without the prior agreement of DPAM.