Fondita European Micro Cap continues to deliver strong returns in a supportive market environment for European micro-caps. 

Economic activity across Europe has continued to improve throughout the year, and it is encouraging to see this reflected in the performance of smaller listed companies. Fondita European Micro Cap, which invests in Europe’s smallest listed companies, has delivered strong performance year-to-date. At the start of August, the fund ranked among the top 15% in its European small-cap peer group and had returned almost 11 % year to date, outperforming the European micro-cap market by approximately 6 percentage points.

The fund focuses on smaller innovative companies with attractive long-term growth prospects. Over the year, a number of holdings have benefited from both cyclical tailwinds and long-term structural trends, including electrification, defense spending, reshoring and automation. These companies have been important contributors to the fund’s performance.

The current valuation gap within the small-cap segment is also illustrated by the growing interest from strategic and financial buyers. This year, three portfolio companies, software provider Datagroup, outsourcing specialist Mitie Group and medical technology company Advanced Medical Solutions, have become takeover targets. These holdings have made a meaningful positive contribution to returns. In recent years, seven of the fund’s investments have been the subject of takeovers. 

Leading indicators in Europe remain encouraging. Purchasing Managers’ Indices across continental Europe are at their highest levels in five years, which strengthens our confidence in the outlook for the remainder of this year and into 2027. The companies held by the fund are currently expected to deliver average earnings growth of 29% in 2026 and 24% in 2027.

Portfolio Manager
Kenneth Blomqvist