Photo: Birgitte Olsen © Bellevue Asset Management
By Birgitte Olsen, Head of Entrepreneur Investments at Bellevue Asset Management
Robust performance: European small and mid-caps have gained around 8% since the start of 2026.
Favourable outlook: rising corporate earnings and a more resilient economy are creating supportive conditions.
Growth opportunities: the billions being invested in AI, energy, infrastructure and automation are benefiting many specialised European companies.
Long-term performance: the Bellevue Entrepreneur Europe Small fund has delivered an annualised net return of 11.7% over 15 years.
European small and mid-cap stocks rose by around 8% between the start of the year and 20 September 2026. Despite the tensions surrounding Iran, they have performed solidly, broadly in line with the main European indices. The rise in oil prices to above $100 a barrel has triggered a slight market correction since August. In our view, this creates an opportunity, given the strength of the fundamentals.
European corporate performance has been underpinned by healthy margins and solid earnings growth, as the second-quarter reporting season showed. Since the start of the year, earnings forecasts for European companies have been revised up by around 6%, and growth of 14% is now expected for 2026, well above the long-term average. With the exception of the automotive and consumer discretionary sectors, all sectors posted positive revenue and earnings growth.
Recent European economic data have also exceeded expectations. Manufacturing PMIs are improving and economic activity remains resilient, while GDP growth forecasts have been revised upwards for both the eurozone and Germany. This backdrop bodes well for the third-quarter earnings season, which begins in October, particularly for European small and mid-caps.
Europe is at the start of a long-term investment cycle. Artificial intelligence, energy security and geopolitical realignment are driving both private and public investment, and the small and mid-cap segment, which includes many specialised companies, should be particularly well positioned to benefit.
From an investor’s perspective, the following points remain critical:
Industrial companies account for around 30% of the European small and mid-cap segment. They benefit both from the improving economic environment and from structural trends such as electrification, AI infrastructure, energy efficiency, industrial automation and the reshoring of production capacity.
The resulting demand favours highly specialised companies that lead their niche markets, with pricing power and growth prospects that extend beyond the economic cycle. Andritz, Nexans and Nordex, for example, are benefiting from rising demand in specialised end markets such as hydropower, cabling systems and onshore wind energy.
The Bellevue Entrepreneur Europe Small fund invests in European small and mid-caps, particularly owner-managed companies. Its investment universe comprises more than 2,000 stocks, most of which receive little analyst coverage.
The fund invests only in companies whose shares trade at a significant discount to their estimated intrinsic value, an approach that offers both upside potential and a margin of safety. It does not favour any particular investment style: its portfolio can include value, GARP and growth stocks, provided their fundamentals justify their valuations.
Over its 15-year history, the fund has generated an annualised net return of 11.7%, outperforming both its small and mid-cap benchmark and the STOXX Europe 600 Total Return index.
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