Market commentary, September 24, 2026

Europe’s small & mid caps: Opportunities remain intact in a new investment era

Birgitte Olsen, Head Entrepreneur Investments, Bellevue Asset Management

• Strong performance: European small caps have gained around 8% so far in 2026.
• Positive outlook: Rising corporate earnings and a more resilient economy are creating a positive environment.
• Growth opportunities: Billions in investments in AI, energy, infrastructure and automation are benefiting many specialized European companies.
• Proven over the long term: The Bellevue Entrepreneur Europe Small Fund generated an average annual net return of 11.7% over 15 years.

European small and mid caps gained around 8% from the beginning of the year through September 20, 2026. Despite the challenging situation in Iran, they performed well and broadly in line with the major European indexes. The rise in oil prices to above USD 100 has led to a modest market correction since August, which we view as an opportunity given the favorable underlying conditions.

Solid earnings growth and a positive macroeconomic environment

Returns were supported by healthy margins and solid earnings growth, as demonstrated by the second-quarter reporting season. Since the beginning of the year, earnings expectations for European companies have been revised upward by around 6%. Growth of 14% is now expected for 2026, well above the long-term average. With the exception of the automotive industry and the consumer discretionary sector, all sectors reported positive sales and earnings growth.

European economic data has recently surprised to the upside. Manufacturing PMIs are improving, while economic activity remains resilient. GDP growth forecasts have been raised for both the eurozone and Germany. This provides a favorable backdrop for the third-quarter reporting season beginning in October, particularly for European small and mid caps.

The CapEx supercycle

Europe is at the beginning of a long-term investment cycle. AI, energy security and geopolitical realignment are driving private and public investment. The small- and mid-cap segment, with its many specialized companies, should be particularly well positioned to benefit.

From an investor perspective, the following points remain key:

• AI investments extend far beyond the technology sector. Rising energy demand and the necessary expansion of infrastructure are creating opportunities for less obvious beneficiaries.
• The new market regime is characterized by higher real interest rates, greater volatility and increasing government intervention. At the same time, the reshoring of supply chains and infrastructure investments are increasing capital intensity and financing costs.
• Given the level of market concentration, particularly within the broad AI ecosystem, active stock selection, balanced diversification and consistent valuation discipline are key.
• European industrial and technology companies as well as real assets from the «Old Economy» are likely to benefit.

Focus on industrial companies

Industrials account for around 30% of the European small- and mid-cap segment. They benefit both from the improving economic environment and from structural trends such as electrification, AI infrastructure, energy efficiency, industrial automation and the reshoring of production capacity.

The resulting demand benefits highly specialized companies that are leaders in their niches, have pricing power and offer growth prospects beyond individual economic cycles. Andritz, Nexans and Nordex, for example, are benefiting from rising demand in specialized end markets such as hydropower, cable systems and onshore wind energy.

Clear investment philosophy, long-term track record

The Bellevue Entrepreneur Europe Small Fund focuses on European small and mid caps, particularly owner-managed companies. Its investment universe comprises more than 2000 stocks, most of which receive limited analyst coverage.

The fund only invests in companies that trade at a significant discount to their estimated intrinsic value. This provides upside potential and a margin of safety. The approach is style-agnostic and includes value, GARP and growth companies, provided their fundamentals justify the price.

Over its 15-year track record, the Bellevue Entrepreneur Europe Small Fund generated an annualized net return of 11.7%, outperforming both its small- and mid-cap benchmark and the STOXX Europe 600 Total Return Index.

Find out more on our website.

Contact
Bellevue Asset Management AG, Theaterstrasse 12, CH-8001 Zurich,
Fabienne Tresch, Tel. +41 44 267 67 00, ftr@bellevue.ch, www.bellevue.ch

Bellevue – Excellence in Specialty Investments

Bellevue is a specialized asset manager with a focus on healthcare investments, small and mid-cap strategies, and other growth strategies where an active management style is particularly promising. Its product offering comprises investment funds, active ETFs, investment companies and institutional mandates. Founded in 1993 and listed on the SIX Swiss Exchange, Bellevue employs around 75 professionals and creates value added for clients and shareholders through attractive investment performance. As of June 30, 2026, assets under management amounted to CHF 4.8 bn.

Disclaimer
This press release is issued by Bellevue Asset Management AG, which is an authorized asset manager subject to the supervision of the Swiss Financial Market Supervisory Authority (“FINMA”) and acts as an Investment Manager of the Bellevue Funds (Lux) SICAV. Bellevue Entrepreneur Europe Small Fund is a subfund of Bellevue Funds (Lux). The information and data presented in this press release are not to be considered as an offer to buy or sell or an invitation to subscribe any securities or financial instruments. For potential investors in Singapore Investment returns may increase or decrease due to exchange rate fluctuations. The fund(s) is not authorized or recognized by the Monetary Authority of Singapore (the “MAS”) and its shares are not allowed to be offered to the retail public. The Sub-Fund is a restricted scheme under the Sixth Schedule to the Securities and Futures (Offers of Investments) (Collective Investment Schemes) Regulations of Singapore. This press release is not a prospectus as defined in the SFA and accordingly, statutory liability under the SFA in relation to the content of prospectuses does not apply. The MAS assumes no responsibility for the contents of this Information Memorandum. You should consider carefully whether the investment is suitable for you and whether you are permitted (under the SFA, and any laws or regulations that are applicable to you) to make an investment in the Shares. If in doubt, you should consult your legal or professional advisor. This Information Memorandum has not been registered as a prospectus with the MAS. Accordingly, this Information Memorandum, the Prospectus and any other document or material in connection with the offer or sale, or invitation for subscription or purchase, of Shares may not be circulated or distributed, nor may Shares be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to any persons in Singapore except in accordance with the restrictions and conditions under the SFA. By subscribing for Shares pursuant to the exempt offer under this Information Memorandum, you are required to comply with restrictions and conditions under the SFA in relation to your offer, holding and subsequent transfer of Shares.

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