Bellevue Entrepreneur Europe Small

European SMid caps, as measured by the MSCI Europe Small Cap ex-UK Index, increased 2.0% in the month, outperforming European large caps (Stoxx Europe 600 0.5%). Softer US labour data initially supported bonds in August, before persistent inflation and renewed US-Iran tensions pushed energy prices and yields higher toward month-end. Policy rates were unchanged, but euro area inflation at 3.3% and Fed Chair Warsh’s hawkish Jackson Hole speech raised expectations of ECB and Fed hikes in September. In Europe, the data flow was more encouraging. German GDP was revised up to 0.3% q/q, led by exports, while factory orders rose 3.1%. The Eurozone Composite PMI increased to 52.1, its highest since November, as manufacturing reached a four-year high of 52.7 and services remained in expansion at 51.7. In terms of sectors, Energy (+6.2%), Information Technology (+4.9%) and Materials (+3.8%) performed best while Real Estate (-4.9%), Consumer Staples (-1.7%) and Healthcare (+0.8%) lagged the most.

Against this backdrop, the Fund (B-share, EUR) was up 1.6%, underperforming its benchmark by 33 bp. YT-August-end the Fund is up 10.9% with an outperformance of 88 bp.

Top detractors in the month were Merlin Properties (-11.0%), Flughafen Zurich (-12.6%) and Virbac (-4.4%). Merlin Properties suffered from rising long-term rates and a lack of directional clarity around the AI trade, while Phase III of its data center project appears to be progressing faster than expected but is only partially financially secured at this stage. Flughafen Zurich delivered H1 results broadly in line with expectations, with solid Swiss operations offset by a mixed international business, as the Noida airport ramp-up has been more uneven than the market anticipated. Virbac reported solid results and reiterated its full-year guidance, but this failed to generate investor enthusiasm; weaker sentiment toward French-listed equities may also have weighed on the shares.

Top contributors in the month were Metso (+10.6%), Puig (+10.5%) and Subsea 7 (+8.8%). Metso delivered solid H1 2026 results, with Minerals orders standing out as they came in well ahead of market expectations. Positive momentum continued through the month, supported by new order wins, broker upgrades and expectations of stronger mining capital expenditure amid a supportive commodity cycle. Puig reported solid H1 2026 results, with like for like revenue growth of 4.4% and EBITDA margin expansion of 15 bp, both slightly ahead of expectations. The company reiterated its full-year guidance and announced a Capital Markets Day for October, while positive trading updates from peers such as L’Oréal and Estée Lauder provided further support to the shares. Subsea 7 benefited from a strong Q2 earnings beat and subsequent analyst upgrades. Progress on the proposed merger with Saipem also contributed after US antitrust clearance, although a pause in the EU review introduced some uncertainty toward month-end.

With the Q2 reporting season now largely complete, the stronger than expected delivery discussed last month has been confirmed. Earnings growth, beat rates and corporate commentary remained supportive, while European SMID companies continued to demonstrate greater resilience than macro headlines suggested. The economic backdrop remains favorable, although stickier inflation, higher energy costs and elevated long-term interest rates have increased the risk of tighter monetary policy. In this context, our structural focus on companies with strong balance sheets, pricing power, visible order books and exposure to secular trends is particularly well suited. ons.