Fiera Capital Launches US Small-to-Mid Cap Strategy in Europe
10 JUL, 2024
By Jose Luis Palmer from RankiaPro Europe
Fiera Capital, an independent global asset management firm managing over US$122.1 billion as of March 31, 2024, has introduced its 'all seasons' Small-to-Mid (SMID) Cap Growth strategy to European institutional and wholesale investors. This expansion meets growing European demand for high-growth US equities, particularly in the small to mid-cap segment.
Key Highlights:
Strategy Overview
- SMID Cap Growth Strategy: Aimed at delivering substantial capital appreciation through various market cycles while offering stability during downturns.
- Portfolio Composition: Typically holds 60 to 90 companies, initially valued between US$150 million and US$10 billion.
- Performance: The strategy boasts a 23-year track record, with the US$6.1 billion fund returning 24.61% over 12 months and 15.25% over three years (as of March 31, 2024), outperforming the Russell 2500 Growth Index.
Investment Philosophy
- Lead Portfolio Manager: Sunil Reddy emphasizes the underappreciated long-term potential of small to mid-size US companies.
- Research Process: A rigorous, disciplined approach identifies standout companies poised for growth. Focus areas include cloud computing, e-commerce, AI, and advances in therapeutics.
- Team Composition: A seven-member team founded in 1987, specializing in identifying innovative companies driving significant technological, economic, demographic, regulatory, or societal changes.
The market tends to underestimate the longer-term opportunity posed by small to mid-size companies, US small and mid-caps represent an excellent opportunity for investors seeking exposure to dynamic US companies beyond the highly-subscribed and analysed large cap market. Our rigorous research process and proven portfolio management team enable us to identify standout companies that are positioned for growth and pose attractive risk return levels across.
Sunil Reddy, Lead Portfolio Manager
Strategic Benefits
- Balanced Growth and Risk Management: The strategy incorporates both stable growth companies with consistent EPS growth and emerging growth companies characterized by disruptive innovation and explosive revenue growth.
- Active Management Advantage: Reddy notes the inefficiency of passive approaches in the small to mid-cap market, with 85% of the fund’s alpha derived from meticulous stock picking to avoid "zombie" companies with no earnings.
European Expansion
- Demand for Diversified US Equities: Klaus Schuster, EMEA CEO, highlights the growth potential of under-researched small to mid-cap US equities as a complement to large-cap exposure, enhancing portfolio performance without significantly increasing risk.
- UCITS Availability: The strategy, identical to its US '40 Act counterpart, is now available as a UCITS vehicle, ensuring accessibility for European investors.
Conclusion
The launch of Fiera Capital’s SMID Cap Growth strategy in Europe underscores the firm’s commitment to providing high-quality, actively managed investment opportunities. By leveraging its robust track record and comprehensive research approach, Fiera Capital aims to meet the evolving needs of European investors seeking exposure to high-growth US equities beyond the well-trodden large-cap market.
