Bellevue Entrepreneur Swiss Small & Mid

Swiss SMID Caps as measured by the SPIEX Index rose 3.3% in the month (SXXR 1.96%, MSCI World -0.82%). Tensions in the Gulf kept energy markets on edge in October, with Brent rising nearly 14%, although oil flows through the Strait of Hormuz held up well. With little sign so far of second-round effects, the Fed and the ECB could afford to pause after September’s hikes. Equity markets digested mixed hyperscaler earnings that kept the debate on AI returns alive, while in Europe French bonds came under pressure amid budget uncertainty before recovering slightly from their lows. Toward month-end, Qatari mediation revived hopes of a US–Iran deal, though markets remained attentive to how the 3 November midterms might shape Washington’s stance. The EZ economy continued to prove resilient. The Eurozone Composite PMI stood at 51.9, with manufacturing at 52.7 and services at 51.7, keeping activity in expansion territory. This marks the 8th consecutive month of expansion, supported by both production and order books. In Switzerland the Manufacturing PMI rose to 56.7 in October, exceeding market expectations. The Service PMI was stable at high levels (59.9). From a sector perspective Communication Services (+10.2%), Healthcare (+8.3%) and Consumer Staples (+6.8%) performed best, while Consumer Discretionary (-1.3%), Financials (+0.5%) and Information Technology (+0.7%) lagged the most.

Against this backdrop, the Fund (B-share, CHF) rose 2.3%, underperforming the benchmark by 109bps.

Main detractors in the month were Gurit (-19.9%), Inficon (-9.6%) and Companie Financière Tradition (-6%). Gurit suffered some profit taking after a strong run (YTD +414%) on the back of a broker downgrade. The Q3 sales update showed continued recovery (+14.3% cst fx) across all divisions, but the absence of a FY guidance increase disappointed the market. Inficon reported excellent Q3 results with sales growing 42% and the management raising FY revenue and margin guidance. Despite strong operating results, the stock could not escape the general semiconductor sell-off. CFT was soft on no news. Q3 was released later early November and confirmed dynamic revenues growth above 10%.

Top 3 contributors were Sulzer (+15.5%), Temenos (+19.3%) and Roche (+14%). Sulzer managed to beat expectations and released accelerating Q3 orders reassuring the market. The Flow division grew order intake by +36% thanks to several larger orders in the Energy BU. Services remained negative due to customers deferring maintenance activities in an environment of high energy prices, although management noted an improving trend towards the end of Q3. Temenos reported strong Q3 results allowing for an outperformance vs. the lacklustre Tech sector. Revenue was up 12%, with subscription/SaaS revenue +22% and adjusted EBIT up 26%. The adjusted operating margin expanded four percentage points. Management raised FY EBIT growth guidance from to 12% and EPS growth to 10%. Roche benefited from solid Q3 results, with sales up +7% at constant currency and ahead of expectations, while full-year guidance was confirmed. The stock was further supported by positive Phase 3 data for divarasib in lung cancer and fenebrutinib in multiple sclerosis, as well as anticipation ahead of FDA decisions for giredestrant in breast cancer.

We see opportunities for Swiss SMID caps, while remaining mindful of geopolitical uncertainty and the induced macro risk through higher energy prices and interest rates. October’s contrasting share-price reactions reinforced the importance of earnings delivery and credible guidance, even when headline results were strong. We favour companies with resilient cash generation, sound balance sheets and the ability to fund their own growth. Synchronised global investment in the structural growth themes of industrial innovation, AI, electrification, energy security, infrastructure and defence offer potential support, although the timing of orders and their conversion into profits remain critical. We seek opportunities where share prices imply a more cautious outlook than company fundamentals warrant as the valuation of some “picks and shuffles” have come down a long way. Our focus remains on building long-term returns through disciplined valuation and company research.