At the beginning of 2025, few would bet on low capitalization securities in Europe, as investors preferred to focus on large companies, convinced that the tariff threats of Donald Trump would remain only words. Economic growth and optimism on profits had pushed the Stoxx Europe 600 index to record levels, leaving the Small Caps in the background.
According to Bloomberg, today the scenario has changed radically: the unpredictable moves of the White House and the introduction of wide -spectrum duties have overturned the cards on the table and the small caps, more linked to domestic markets and less exposed to global tensions, have become an attractive refuge. Since April, the Stoxx Europe Small 200 index has risen by 21%, beating the performance of 17% of the largest securities. To support the rally also the strengthening of the euro, up 13% from the beginning of the year.
The managers who have sniffed the opportunity
Among the protagonists of this rebirth is Michael Oliveros in Invesco, whose fund on continental Small Caps exceeded 82% of competitors, thanks to investments in reality such as the small Austrian bank Bawag Group (Austria), the Swedish pharmaceutical Asker Healthcare (Sweden) and the British Sigmaroc (United Kingdom) active in the sector of construction materials.
Oliveros is part of a host of patrimonial managers who have generated stellar returns for investors who try to avoid turbulence induced by global trade, favoring titles with more rooted business in domestic markets. Spacing from sectors ranging from defense to industrialist and finance, these actions to small capitalization are also benefiting from the lowest interest rates in Europe and the most convenient assessments after years of submarine.
Among the other managers who caught the moment Nicolas Walewski of Alken Asset Management, who focused on the defense sector, driven by the historic German tax reform, with securities such as the French Exil Technologies, flew by over 550% in 2025.
On the infrastructure front, Edmond de Rothschild AM’s Benjamin Rousseau chose the Italian Icop Spa, specialized in underground construction.
Attractive evaluations, but with risks
The Small Caps normally exchange higher multiples than the great titles. But years of weakness have made them more accessible today: for many analysts it is a unique opportunity. However, there are factors of uncertainty: the commercial war is not over, the crisis in Ukraine weighs and, despite the estate of European profits, the United States continue to run more.
The prospects for the next few months
Although deceased for $ 2.8 billion from the European Small Cap funds in the first seven months of 2025, estimates on profits remain encouraging and could translate into further rise. According to Bloomberg, therefore, the European Small Caps have gone from being a segment neglected to one of the most discussed, thanks to interesting assessments, domestic focus and renewed attention from investors.
