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December – Health rounds off the year and is at its best over the past year
The NAV price for the fund's A class was 107.58 in December. The fund's A class lost 0.70% in December and has returned 2.42% in 2024, which is 11.09 percentage points better than the fund's reference index OMX Small Cap GI.
The fund aims to outperform the fund's benchmark index (OMX Small Cap GI) by a few percentage points per year at lower risk than the benchmark index. The average weight of the portfolio holdings during December was 0.86%. Anything above 0.86% means that the fund is overweight the company and below 0.86% means that the fund is underweight.
Return after fees, Class A
| December 2024 | 2024 | Since the fund's inception, Dec 2023 | |
| OMX 30 GI | -1,22% | 6,79% | 10,62% |
| OMX Small Cap GI | -0.20% | -8,67% | -4,15% |
| Finserve Micro Cap A | -0,70% | 2,42% | 7.59% |
Best companies in the portfolio and average weight during the month
| Name | Contribution % | Weight % |
| SEDANA MEDICAL AB | 0,32 | 0,81 |
| SANIONA AB | 0,21 | 1,11 |
| HANZA AB | 0,16 | 1,14 |
| LINC AB | 0,15 | 0,96 |
| BERGMAN & BEVING AB | 0,14 | 0,87 |
Worst company in the portfolio and average weight during the month
| Name | Contribution % | Weight % |
| MOBERG PHARMA | -0,31 | 0,56 |
| PRECISE BIOMETRICS AB | -0,17 | 1,02 |
| RAILCARE GROUPS AB | -0,20 | 0,97 |
| ALLIGATOR BIOSCIENCE AB | -0,16 | 0,2 |
| WASTBYGG AB | -0,15 | 0,75 |
Index comparison
If we sum up the year, the difference between the smallest small companies (OMX SMALL CAP) and the larger companies (OMX MID AND OMX LARGE CAP) increased throughout the year except in December when the difference stopped increasing for the first time. Historically, the index series for OMX Small Cap and OMX Mid Cap have followed each other relatively evenly over time. We measure the difference by looking at the OMX Mid Cap index compared to the OMX Small Cap index. The difference between these indices since the beginning of the year is about 27 percentage points and in five years about 55 percentage points. This indicates that there may be significant potential for returns in the companies included in OMX Small Cap going forward.
The chart shows OMX Small Cap (green) compared to OMX Mid Cap (Brown) and OMX Large Cap (Blue) over 5 years. Source: Infront
| Small Cap Index: Company value less than approximately SEK 1.5 billion. |
| Mid Cap Index: Company value between approximately SEK 1.5 and 12 billion. |
| Large Cap Index: Company value greater than approximately SEK 12 billion. |
The market
December was a wait-and-see market as investors seemed to be looking for direction for the new year. Large-cap indices fell by just over 1.1%, while small-cap indices ended the month slightly weaker, on a marginally negative note. Initially, we saw some optimism in the form of a “plot rally,” but towards the end of the month this ebbed away, and the market closed largely unchanged. The healthcare sector stood out positively, while some other sectors experienced headwinds and contributed to the decline.
Central bank actions were in focus in December. The Swedish Riksbank cut its key interest rate by 25 basis points to 2.50 percent, marking the fifth rate cut of the year. In the global arena, both the ECB and the Federal Reserve (Fed) followed suit, cutting their respective key rates by 25 basis points.
Ahead of the new stock market year, we are faced with a number of questions regarding economic recovery, companies' earnings prospects and inflation trends. Our assessment is that the economy will gradually improve in 2025, which should also create a favorable environment for small companies. With their flexibility and faster adaptability, they are expected to benefit from a potential recovery in the global economy. At the same time, the support measures of central banks offer an interesting climate for long-term investments. That said, we look ahead with cautious optimism and look forward to navigating a market that is likely to be characterized by both opportunities and challenges in 2025.
Forecast – some go against the grain
We clearly see that there is potential in the smallest small companies in view of the implemented and possible future interest rate reductions. OMX Small Cap Index and smaller companies in OMX Mid Cap have fallen sharply after the performance of larger companies, it is a golden time to consider an investment in smaller small companies.
According to the model, more capital is systematically allocated to companies that are trending in the market. In 2024, the portfolio had exposure to 9 out of 10 stock market winners in 2024 and overweight to 7 out of 10 companies. Of the stock market losers in 2024, the portfolio had exposure to 1 out of 10. This can be interpreted as both a recovery in several of the smallest companies included in the OMX Small Cap and OMX Mid Cap indices. Many of the winners and losers in 2024 are in the healthcare sector.
| Company | Return 2024 | Finserve Micro Cap exposure | Market value |
| PRECIS BIOMETRICS | 345% | Overweight | SEK 444 million |
| ISOFOL MEDICAL | 204% | Underweight | SEK 410 million |
| HOIST FINANCE | 143% | Overweight | SEK 8,613 million |
| EQL PHARMA | 143% | Overweight | SEK 2,490 million |
| RAYSEARCH LABORATORIES | 139% | Overweight | SEK 5,901 million |
| SANIONA | 125% | Overweight | SEK 835 million |
| TF BANK | 120% | Overweight | SEK 8,471 million |
| BIOINVENT INT. | 116% | Overweight | SEK 2,737 million |
| BONE SUPPORT | 106% | Outside the portfolio due to high market value | SEK 26,732 million |
| COINSHARES INT. | 101% | Average weight | SEK 5,592 million |
| OMX Small Cap Index | -8,67% | ||
| OMX Mid Cap Index | 18.11% |
| Company | Return 2024 | Finserve Micro Cap exposure | Market value |
| XBRANE BIOPHARMA | -98% | Underweight | SEK 271 million |
| FINGERPRINT CARDS | -98% | Outside the portfolio | SEK 132 million |
| VIAPLAY GROUP B | -88% | Outside the portfolio | SEK 3,114 million |
| EPISURF MEDICAL | -88% | Outside the portfolio | SEK 89 million |
| VIAPLAY GROUP A | -87% | Outside the portfolio | SEK 3,114 million |
| NANOLOGICAL | -82% | Outside the portfolio | SEK 160 million |
| ONCOPEPTIDES | -80% | Outside the portfolio | SEK 339 million |
| Q-LINEA | -77% | Outside the portfolio | SEK 86 million |
| ACTIVE BIOTECH | -76% | Outside the portfolio | SEK 142 million |
| JUST | -74% | Outside the portfolio | SEK 16 million |
Data between 2023-12-29 and 2024-12-23. Source: Infront
If you want to read more about the potential of small companies and listen to our manager Joakim Stenberg's participation in two podcasts in 2024. Placerapodden, Swedish small companies are the best in the world | Place and Spartorget, Is the monkey better than the manager?
Did you know that?
Is January one of the best stock market months of the year? If you analyze the return on the OMX30 since 1980, the best months are January, February and November, where a full 71% of all months have yielded positive returns.
Source: Samuelssons report: Best and worst months for the stock market in Sweden
Strategy
The fund's goal is to achieve good risk-adjusted returns, offer equity exposure to companies that few other funds own, and to weather downturns well through equal weighting and even sector exposure.
The fund rebalances all positions every six months. Historically, the strategy of equal-weighting a broad equity portfolio has resulted in higher risk-adjusted returns compared to market-value-weighted broad portfolios. This outperformance can be attributed to the strategy's ability to better handle downturns, unlike value-weighted portfolios that are often heavily concentrated in individual stocks. The strategy is based on trend-following investments between equal-weightings, focusing on companies that exhibit low volatility and a clear positive trend.
Finserve Micro Cap invests in companies listed on the regulated market. The portfolio consists of more than 100 companies listed on the OMX Small Cap and OMX Mid Cap lists over time. The companies in the portfolio have an average company value of approximately SEK 2.5-3.5 billion over time. This value is significantly lower than the average among competitors' micro cap and small company funds.
Thanks to regular equal weighting, the trend strategy and the fact that the fund is one of the few fund owners in many of the companies, the fund has a low correlation with traditional micro cap and small cap funds.