Small and mid caps

By employing a meticulous "bottom-up" stock selection methodology, we follow a "Quality At a Reasonable Price" (QARP) investment style. This means investing in businesses of exceptional quality while ensuring that we do not overpay for them. We place a strong emphasis on companies that meet our high-quality threshold, which includes factors such as financial strength, consistent profitability, and a robust commitment to environmental, social, and governance (ESG) principles. We also actively seek out mispriced stocks within this sector, identifying companies whose current market value does not reflect their quality.

The SMID segment presents an exciting opportunity as it is relatively under-researched. It provides access to well-established companies with strong fundamentals, including a solid market share, healthy margins, and stable/predictable profits, all at reasonable prices.

We believe that SMID cap markets are much less efficient compared to broader equities. One primary reason for this is the significantly lower level of analyst coverage among SMID caps relative to large caps. As long-term investors, we capitalise on these inefficiencies, frequently finding compelling investment prospects that offer attractive returns through a combination of valuation rerating and earnings compounding.

Global SMID Cap definition and investable universe