Tough 2018 for Swiss small cap stocks

2018 was not a good year and Swiss equities lost -9% over the whole year. Small caps fared much worse, as these (SPIEX) were down -17%. In case of turbulence, companies that have a diversified product range and are globally active are at an advantage. It is also easier for large ones to finance new projects because they can obtain more favourable credit market conditions. In the low interest rate environment of recent years, most companies have benefited. If interest rates rise again in future, lenders will scrutinise in more detail projects for their profitability.

Smaller companies are more exposed to market volatility. Since the beginning of the year, the market has made up for some of its December losses, with smaller ones often being preferred. Nevertheless, we prefer larger quality companies, with good predictability of their future income. These, we are convinced, will continue to delight investors in the long term.