For much of the past five years, EU small caps have lived in the market’s coldest corner. 2025 effectively marked a fifth consecutive year in which smaller European companies lagged their large-cap peers, an anomaly that defies decades of market patterns.

European private credit has become a central source of financing for the real economy, supported by tighter bank lending standards and persistent corporate funding needs. Within this universe, senior direct lending continues to stand out as a conservative strategy for investors focused on contractual income generation and downside protection.

Emerging Market (EM) equities tend to move in ‘super cycles’, extended periods of outperformance or underperformance relative to Developed Markets (DM). The last EM upcycle began in the late 1990s, following the Asian debt crisis, and lasted until the early 2010s. This was succeeded by nearly 15 years of EM underperformance. However, with EM equities now outperforming DM for the second consecutive year, investors are increasingly questioning whether we are entering a new super cycle. We examine the underlying drivers and find compelling reasons to believe so.