Turning three years old and best in class!

Exactly 3 years ago (June 2022) we launched our Finnish micro cap strategy under the newly named and branded Fondita Finland Micro Cap fund. Up until then the fund was an all cap Finnish equity fund called Fondita Equity Spice, our oldest fund that had delivered an impressive annual return of 10% since 1997. However, the market environment and investor behaviour changes over time and we have to adapt. We must focus on segments of the market where we see the best potential for returns and where we can provide the most added value to our investors.

During the beginning of 2022, in the midst of a very turbulent macro environment and extreme geopolitical turmoil, we assessed that it was time to change the funds strategy. After a lot of research we concluded that the micro cap segment within the Finnish equity universe is likely to generate better absolute, and risk-adjusted, returns compared to an all cap strategy. The idea was to capture industry diversity, high innovation level and attractive growth profile that is available in this particular segment of the Finnish listed equity universe.  We also believed we would have an edge vs. the competition due to the 25 year experience of successful micro- and small cap investing at Fondita, from the Nordics in particular. This decision was the right one and has so far benefited our investors.

Since the launch 3 years ago Fondita Finland Micro Cap is the best performing Finnish small- or micro cap fund with a +11,6 % return. The fund has beaten its underlying market by more than 27% during this period but with a relatively low volatility. The fund has also performed better than the broad Finnish equity indices during the past three years.  Some of this outperformance can be derived from holdings being acquired by foreign industrial buyers. We would of course rather see them continuing their journey as Finnish companies, but it shows that many of these businesses are perceived as having great potential and are in many cases attractively valued.

We are very proud of the excellent performance of the fund in a quite difficult market. The strong track record shows that our investment strategy has worked. We are optimistic regarding the future, not least because of investors turning their eyes increasingly towards European small caps in general but also because there are signs that the Nordic IPO market is finally waking up from its three-year slumber.

Marcus Björkstén & Kenneth Blomqvist

Portfolio Managers for Fondita Finland Micro Cap

Disclaimer: This is marketing communication. The past performance of the investment fund does not provide any guarantee of future results. Read the fund prospectus and PRIIPs KID before making any investment decisions. The documents are available in English, Finnish and Swedish and can be found on our website under the Report section.