Bellevue Entrepreneur Swiss Small & Mid

Swiss SMID caps, as measured by the SPIEX, declined 2.5% in September, underperforming the broader Swiss market (SMI; -0.5%). On the back of softening employment data, the US Federal Reserve finally cut rates by 25 bps, potentially marking the start of a broader easing cycle. In France, Prime Minister François Bayrou’s government fell after a no-confidence vote tied to austerity measures, with Sébastien Lecornu appointed as his successor and tasked with passing a key budget in parliament, once a new cabinet is formed. In Germany, parliament approved the 2025 federal budget. Total expenditures are up EUR 25 bn to EUR 503 bn, confirming a clear shift toward expansionary fiscal policy. The eurozone’s Composite PMI rose to 51.2, marking a fourth consecutive increase. Services remained firmly in expansion territory (51.3), while manufacturing moderated (49.8) from the three-year high of 50.7 reached in the previous month. In Switzerland, the procure.ch Manufacturing PMI dropped to 46.3 in September, down from 49 in August, as rising protectionist measures are weighing on the industry. In the meantime, inflation remains under control, with core inflation up 0.7% yoy in September, in line with August. From a sector perspective, utilities (+1.7%), real estate (+1.4%), and industrials (-0.8%) performed best, while materials (-19.2%), communication services (-5.0%), and healthcare (-4.9%) lagged the most.

Against this backdrop, the fund declined 2.5%, in line with the SPIEX. The fund has returned 13.5% ytd, 330 bps above the benchmark.

The main detractors for the month were Burckhardt Compression (-14.3%), Aryzta (-11.9%), and Kardex (-7.6%). Burckhardt Compression will be reporting its H1 2026 results on November 4. While FY and MT guidance remain intact, H1 order intake probably lost some momentum on the back of general customer hesitancy following tariff increases. The cautiousness of the company ahead of the publication of its results led to some profit taking. Aryzta delivered mixed Q2 2025 results, with revenue exceeding expectations but lower margins and muted free cash flow due to higher input costs and working capital. The company has also been impacted by the broader derating in the food sector and timing of the dividend reinstatement. Kardex suffered some profit taking despite excellent H1 delivery. Order intake rose 19%, 9% ahead of expectations, on the back of an acceleration of the Remstar business and solid momentum with the Autostore franchise. Kardex expects an even stronger H2, referring to its full sales funnel and improved decision-making for larger projects.

The top three contributors were SoftwareOne (+18.5%), Huber+Suhner (+12.7%), and Montana Aerospace (+9.9%). The first combined 2025 guidance for the recently merged SoftwareOne + Crayon implies an encouraging sales growth acceleration in H2, supported notably by improving trends in North America, where the GTM issues are being solved. Merger synergies are progressing well, supporting the CHF 80–100m savings target and an EBITDA trend growth of 15%–20% over the next three years. Huber+Suhner maintained its upward trend, underpinned by the announcement of a major order for Polatis optical circuit switches from a global hyperscaler, a milestone for its strategic DC growth initiative. Montana Aerospace rebounded as the market focused on the divestment of its non-core energy business and the potential for further M&A as an aerostructure pure play.

During Q3, Swiss SMID caps consolidated their advance in line with their European peers. With a view to 2026, Swiss SMID caps should benefit from a better monetary and fiscal environment in Europe, improving growth, and low inflation. Also, growth perspectives in the US seem to be improving on the back of consumption staying relatively resilient. The Swiss SMID-cap segment has a sound tilt toward the sectors of industrials and tech, which should continue to benefit from positive trends and investments in electrification, automation, and digitalization and the incorporation of AI for productivity gains.