Strong performance for Fondita Global Small Cap in 2025

Fondita has been investing in Small Caps since 1997 and in global stocks already since 1998. The Fondita fund family has grown to include 8 funds during the 25+ years of operations. Out of which 5 funds are micro- and small cap funds and 4 funds have a global focus.

With this background, it felt natural to take the decision last autumn to enhance our product range with a Global Small Cap fund. The fact that it is the first and currently only global small cap fund managed by a Finnish company, makes it even more special.

The fund was transformed from our European Small Cap fund and has since August 2024 had a global investment universe. After the transformation started, it quite quickly had a US weight of 55%. Currently, the US/Europe relation stands at 50/50.

As the market has had its turns since launch, Small Caps have by no means been immune to volatility, quite the opposite. The Trump win in November boosted US Small Caps but the consequent correction has been as strong when tariffs and tax-cut delays kicked in, also pressuring the US dollar. However, since then, the funds’ European holdings have given tailwinds from increased investment activity into defense and infrastructure as well as overall a better momentum in Europe. The valuation levels for European Small Caps, which are at levels not seen since the financial crises, have also finally attracted the wider markets’ attention. The fact that earnings expectations are also surpassing the wider European market for 2025 and 2026 is also a plus. For US Small Caps, the current valuation discount to US Large Caps is at 14-year lows which also looks attractive and gives future support.

The fund’s performance in 2025 has been strong with an outperformance of 7,5 percentage points. The fund is one of the best-performing global small cap funds in the world year-to-date.  The absolute return for Fondita Global Small Cap is flat YTD, but the global small cap index has lost -7,43% in the market turmoil.

The best-performing holdings for Fondita Global Small Cap during 2025 have been German Renk Group (Defense), American Stride (Education Services), German Jungheinrich (Industrials), Spanish Indra Sistemas (IT) and American Urban Outfitters (Retail).

We believe that the fund is well-positioned with quality growth companies. Themes that we feel will continue to drive the performance of the fund are digitalization, defense and education. Also, increased local investments in both Europe and the US usually bode well for smaller, more locally oriented companies.

Although the US exceptionalism story is questioned at the moment, we believe that in the long run, the US will continue to be a strong growth engine of the global economy. For the moment, Europe has taken the lead when it comes to performance, and the big valuation gap supports this. Small caps are an interesting asset class that historically has been able to grow at a faster pace, and we see continued opportunities and good momentum in this asset class.  

Portfolio Managers Kenneth Blomqvist and Janna Haahtela