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The NAV price for the fund's A class was 110.91 in October. The fund's A class lost 3.52% in October and since the beginning of the year has returned 5.59%, which is 11.37 percentage points better than the fund's reference index OMX Small Cap.
| October | This year | Since the fund's inception, Dec 2023 | |
| OMX 30 GI | -2,95% | 9,16% | 13,08% |
| OMX Small Cap GI | -1,91% | -5,79% | -1,12% |
| Finserve Micro Cap A | -3,52% | 5,59% | 10,91% |
Best companies in the portfolio and average weight during the month:
| Name | Contribution | Weight |
| HANZA AB | 0.25% | 0.87% |
| CINT GROUP AB | 0.25% | 0.66% |
| TF BANK AB | 0.22% | 1.06% |
| ENEA AB | 0.22% | 1.26% |
| EQL PHARMA AB | 0.18% | 0.79% |
Worst company in the portfolio and average weight during the month:
| Name | Contribution | Weight |
| SEDANA MEDICAL AB | -0.39% | 0.46% |
| ALLIGATOR BIOSCIENCE AB | -0.30% | 0.55% |
| CELLAVISION AB | -0.24% | 0.80% |
| LINC AB | -0.19% | 0.94% |
| ENAD GLOBAL 7 AB | -0.17% | 1.01% |
Index comparison
Finserve Micro Cap has OMX Small Cap GI as the reference index. Historically, the index series for OMX Small Cap and OMX Mid Cap have followed each other relatively evenly over time. However, the difference between larger small companies and smaller small companies is unusually large and the difference continued to increase during October. We measure the difference by comparing the mid cap index versus the small cap index. The difference between these indices since the turn of the year is about 24 percentage points and in two years a full 30 percentage points. This indicates that there may be significant potential for returns in the small cap companies going forward.
The chart shows OMX Small Cap (green) in comparison to OMX Mid Cap (blue) and OMX Large Cap (black) since the beginning of the year until the end of October. 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
October offered an intense reporting period with varying market reactions. In our portfolio, real estate and healthcare companies had a tough month, while financials and technology sectors delivered better results.
The month was marked by the US presidential election where Trump once again took the White House. The election itself has limited direct impact on our portfolio. On the other hand, Trump's policy regarding reduced taxes can create good conditions for the stock market, but at the same time, increased tariffs can create headwinds for Swedish export companies, especially in the industrial sector
Both the Riksbank and the Fed lowered interest rates at the beginning of November and the risk (S&P 500 Volatility Index, VIX) in the market dropped to a low of 14.92, compared to a high of 21.88 at the end of the month.
Forecast
We clearly see that there is potential in the smallest small companies in view of the implemented and possible future interest rate reductions. The OMX Small Cap Index and smaller companies in OMX Mid Cap have fallen sharply behind the performance of larger companies, which creates a golden opportunity to consider an investment in smaller small companies. Here is an explanation why:
- Low valuations: When the OMX Small Cap Index has fallen behind so significantly, it means that many smaller small caps are now undervalued compared to larger companies. This creates opportunities to buy these companies at attractive prices before the market corrects itself.
- Potential for recovery: Historically, the indices have moved more in line with each other. If this pattern repeats itself, as many investors seem to believe, the smaller companies included in the Mid and Small Cap indexes could rebound strongly.
- Low interest rates benefit small companies: With more interest rate cuts expected in 2024, smaller companies can get cheaper financing and improved conditions for growth. Small companies are often more sensitive to interest rates than larger companies and can therefore benefit more from reduced costs of capital.
- High growth potential: Small companies generally have more potential to grow faster than larger, more established companies. Many small companies have undergone internal structural optimization during periods of high interest rates. Thanks to this, when market conditions improve, small companies can show stronger growth compared to large companies.
- Dynamics of Market Cycles: After smaller caps underperform for a period, we often see them rebound more strongly than larger caps when market conditions improve. This cyclical movement means that small caps may now face a period of outperformance, giving investors the opportunity for higher returns going forward.
If you want to read more about the potential of small companies and listen to our manager Joakim Stenberg's latest participation in Place the podcast,Swedish small companies are the best in the world | Place
Did you know that?
Historically, April and November are known as the strongest months for the stock market's (S&P500) performance. This pattern, which has been observed since about 1950, shows that these two months generally produce higher than average returns.