Europe’s small caps in front of the comeback – why minor values are now exciting again. (Photo: Freepik, Eakrin)
Europe’s minor values are considered the stepchild of the stock exchange. For a long time they dominated the return charts, then they were left behind by the big ones. But now there are strong signals for a comeback. Because if you are familiar with the mechanisms of the market, you know that the best opportunities often arise where others do not look. Right now a look at the best funds for European Minor worth it.
The charm of the neglected: Why small caps are now interesting
The numbers speak a clear language: While the Euro Stoxx 50 has been able to get a whopping 60 percent since autumn 2022, the 100 smallest values in the Euro Stoxx Small only came to half. The segment has even been on the spot since 2023. An unsustainable condition? Many investors believe. Because with falling interest rates, the chances that small caps will start again. “The story shows that small caps cut off better when interest rates drop,” analyzes the British asset manager ABRDN.
There are good reasons for that. Small companies are often highly indebted. If the financing becomes cheaper, profitability increases. Small caps are also more flexible. You can adapt to new trends faster than stubborn large corporations.
But not only the macroeconomic framework speaks for a comeback of the minor values. Even on a fundamental level, many small caps are simply too cheap. The MSCI Europe Small Cap Index Currently noted at one Course-profit ratio (KGV) of 13.5 – a historically low value if you consider that the long -term average is almost 20. “The evaluation is now so attractive that we see significant catch-up potential,” says Olgerd Eichler, lead portfolio manager at Mainfirst.
From the burden to chance: turn the skewer over the falling interest
Subjects suffered for a long time from the framework conditions. The weak economy in Europe burdened her more than Blue Chips. Your disadvantage: less capital, less diversification, higher debts. But now the wind is turning.
ECB President Christine Lagarde assumes that the European Central Bank will continue its interest reductions until well into 2025. At the World Economic Forum in Davos, she indicated that the most important key interest rate should drop to at least 1.75 to 2.25 percent, of which minor values should benefit.
But investors should be selective. Because not all small caps will benefit equally. Companies from the technology, industry and consumer goods sectors are particularly interesting. There are many so -called hidden champions – medium -sized world market leaders who often have strong business models, but still run under the radar on the stock exchange.
Europe’s hidden champions: These small -scale value have potential
A look at the history shows that in the years until 2021, small -scale added values ran away the Blue Chips. MDAX and SDAX beat the DAX for double. The Euro Stoxx Small outperformed the Euro STOXX 50 by 50 percent. The last 2 years? An unusual exception.
The hidden champions of Europe could now tear the helm around. Cancellation is often technological leaders in niche markets. IT and industry are particularly well represented. “We have companies with high growth rates and solid profitability,” says Patrick Suck from Oddo BHF.
However, the world of small caps is extremely heterogeneous. While some companies have strong market positions and stable balance sheets, others are highly indebted or depend heavily on cyclical industries. Investors should therefore invest in a targeted manner – ideally through actively managed funds that filter out the best pearls.
Fund and ETFs: The best options for investors
The variety of small caps makes single investments risky. Private investors should therefore rely on funds and ETFs. Anyone who has built the right products in the past 5 years has been rewarded. Here are the best funds and ETFs for European minor values:
The best funds for European minor values (5-year performance):
- Alken Small Cap Europe: Plus 201 percent-a active fund with a strong stick picking approach.
- Digital Fund Stars Europe Small Cap: Plus 136 percent – focuses on innovative companies with above -average growth.
- Trend Kairos European Opportunities: Plus 127 percent – focuses on dynamic minor values with solid momentum.
The best ETFs for European minor values (5-year performance):
- SPDR MSCI Europe Small Cap Value Weighted ETF: Plus 121 percent – relies on the cheapest minor values with a high substance.
- Wisdomtree Europe Smallcap Dividend ETF: Plus 102 percent – concentrates on dividend -strong small caps.
- SPDR MSCI Europe Small Cap ETF: Plus 82 percent-wide diversification over the entire small cap universe in Europe.
(Status of all data March 31, 2025, source: FWW)
Conclusion: Europe’s small caps are ripe for a comeback
If you want to manage the dominance of the Blue Chips, you now have a rare opportunity. Europe’s small caps are historically cheap, but at the same time offer high growth opportunities. And who knows: Perhaps the next Novo Nordisk or SAP is hiding in the universe of the forces. With the right funds or ETFs, investors can benefit specifically – and secure the returns of the future.
Disclaimer:
No investment advice. No call to buy or sell securities.