Bellevue Entrepreneur Switzerland (CH)

Swiss small and mid caps as measured by the SPIEX Index increased by 0.5% in the month outperforming large caps (SPI -1.9%, SMI -2.5%). April saw intense volatility across global markets following the US announcement of reciprocal tariffs, which triggered a sharp, rapid sell-off. The S&P 500 logged its fifth-worst two-day drop since WWII, while the 30-year Treasury yield briefly topped 5% and the VIX spiked above 50 - levels not seen since early Covid days. Sentiment improved after President Trump granted a 90-day delay on tariffs and opened negotiations with other nations. The Eurozone Composite PMI edged down to 50.4 in April from 50.9 but marked a 4th consecutive month of expansion. The services sector continued to grow, though more modestly, while the manufacturing sector saw a milder contraction. In Switzerland, the procure.ch PMI dropped by 3.1 points in April, falling to 45.8 points, well below the 50-point growth threshold. After a broad-based decline in March, the services PMI stabilized in April to 52.4, highlighting the contrasting dynamics between the export-oriented manufacturing sector and the domestically focused services sector. From a market sector perspective utilities (+6.2%), real estate (+5.8%) and communication services (+4.4%) performed best while consumer discretionary (-4.4%), information technology (-4.0%) and consumer staples (-2.3%) lagged the most.

Against this backdrop, the fund rose 0.8%, 35 bps better versus the SPIEX benchmark.

Main detractors in the month were Roche (-6.1%), Kardex (-8.7%) and Straumann (-4.1%). The healthcare space was not immune to the sweeping tariff announcements and the subsequent USD weakness. Roche’s Q1 results reflected solid overall sales performance overshadowed by FX cuts to FY 2025 guidance. Kardex published strong 2H24 results early March with a clear beat at all levels. The market was surprised by the announcement of a large investment plan over the next two years for future growth, with negative effect on ST margins. Straumann reported ok-ish Q1results with some persistent weakness in the US, while other regions including China displayed good growth. We stay underweight as we deem the valuation excessive in light of the challenging market environment.

Main contributors in the month were Belimo (+29%), Swissquote (+12.1%) and Compagnie Financière Tradition (+7.4%). Belimo surprised the markets with a positive profit warning on the back of their strong US DC business. Introducing Q1 key figures as a premiere, Belimo upped the FY 2025 guidance to 15-20% top line growth and EBIT margins in excess of 20%. Swissquote rebounded after releasing FY24 results and 2025 guidance end of March. The business model remains resilient and well diversified, fully unscathed by the tariff problematic, which is attractive in the current environment. The management is as always conservative in its forward guidance and we see Swissquote’s crypto exposure as a welcome revenue hedge. The inter-dealer broker Compagnie Financière Tradition reported revenue growth of 13.5% for Q1, continuing its growth trajectory. The quarterly comment summarizes the qualities of the business model very well: "This performance was achieved in a market environment characterized by a cautious approach from major central banks in response to mixed economic signals, amid ongoing geopolitical tensions and increased volatility, which benefited the Group's activities".

In the chaos induced by Trump’s “Liberation day” and the subsequent market roller coaster, one had the opportunity to be on the wrong side of trades a multitude of time during the past weeks. While the world debates if the flurry of presidential announcements follows a deeper strategy or a make-it-as-you-go narrative, the persistent weakness of the US dollar sends a clear message. We believe the S&P 500 is vulnerable to earnings downgrade and further multiple derating should follow. The rediscovery of the merits of diversification across currencies and geographies should continue to generate positive flows into Europe and Switzerland. We expect the outperformance of the much left behind category of small and mid caps to continue. It should be noted that the neglected small and mid caps segment offers the greatest idiosyncratic diversification potential.