Fiera Capital has launched its “all-seasons” Small-to-Mid (SMID) Cap Growth strategy to European institutional and wholesale investors.
Expanding the offering reflects growing demand across European markets for exposure to high-growth US equities and the opportunity set beyond the S&P 500, the global asset manager said in a statement on 9 July.
At its core, Fiera Capital’s SMID Cap Growth strategy seeks to deliver significant capital appreciation across multiple market cycles, providing clients with stability during market downturns. The portfolio typically holds 60 to 90 names and consists of companies between US$150mn and US$10bn at time of initial purchase.
With a track-record of over 23 years, the US$6.1 billion fund has returned 24.61 percent over 12 months and 15.25 percent over three years (as at 31st March 2024), delivering significant outperformance versus its Russell 2500 Growth Index benchmark, providing some downside protection and reduced volatility.
“The market tends to underestimate the longer-term opportunity posed by small to mid-size companies,” said lead portfolio manager, Sunil Reddy (pictured). “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.”
Through in-depth analysis the seven-strong team which was founded in 1987 identifies companies that provide innovative solutions to major technological, economic, demographic, regulatory, or societal change. Secular themes such as cloud computing, e-commerce, AI and advances in therapeutics form a tailwind for these companies, carving a path for their ongoing growth.
The managers balance growth and risk management by constructing a dynamic mix of stable and emerging growth companies within the portfolio. Stable growth companies exhibit persistent returns and consistent EPS growth while emerging growth companies are characterised by disruptive innovation, explosive revenue growth and have a large addressable market paired with low penetration.
Reddy said: “We believe the key to repeatable alpha generation is a disciplined, consistent and repeatable process. We have honed our process and proven its effectiveness in multiple economic cycles over the past 20 years.
“Almost a third of the companies on the index don’t have any earnings so a passive approach just doesn’t work when it comes to the small and mid-cap market. Our highly active approach is what allows us to identify and avoid these zombie companies and a lot of idiosyncratic risk unique to the smaller end of the market. More than 85% of our alpha comes from the team’s stock picking.”
The launch of the SMID Cap Growth strategy adds to Fiera Capital’s comprehensive suite of products covering public markets, underscoring the Company’s ongoing commitment to bringing long-term investors high quality, actively managed products and services.
“In recent years, US equities have been a growth powerhouse,” said Klaus Schuster, EMEA CEO, “however the small to mid-cap segment remains relatively under-owned and under-researched. Introducing this strategy to Europe underscores our commitment to providing our clients with strategies that can meaningfully elevate the performance of their portfolios.
“The US SMID Cap strategy can complement pre-existing exposure to large-cap equities and offers diversification without necessarily attracting additional risk.”
The strategy has an open-ended, publicly available track record via a US ’40 ACT vehicle. The UCITS is identical to the existing strategy.
