Lupus alpha Smaller German Champions (ISIN: LU0129233093) is celebrating 25 years of successful investing in German small and mid caps. Since its launch on 3 August 2001, the fund has generated a return of approximately 1,000 percent. This corresponds to an average gain of more than ten percent per year. Over the same period, the Dax rose by around 330 percent (six percent per year).
The fund also clearly outperformed its benchmark: the equally weighted MDax and SDax comparative index grew by 600 percent since the beginning of August 2001. Lupus alpha's largest small-cap fund, with assets of more than EUR 700 million, has thus generated excess returns of around 400 percentage points relative to its benchmark.
“Lupus alpha Smaller German Champions has proven its worth during a period marked by numerous crises,” says Ralf Lochmüller, Founding Partner and CEO of Lupus alpha. "Above all, 25 years of successful investments demonstrate one thing: small and medium-sized companies in Germany have repeatedly proven that they can not only weather crises but also develop new growth prospects. For long-term-oriented investors, German small and mid caps continue to play an important role in strategic portfolio allocation.”
For Björn Glück, Portfolio Manager of the Lupus alpha Smaller German Champions, there is much to suggest that small and mid caps will continue to offer above-average potential. “Many companies are generating solid profits despite the lack of economic momentum that has persisted for years; they are successful internationally and are asserting their competitive position in future markets,” says Glück, who has managed the fund for around 15 years. Over the next twelve months, expected earnings growth for small and mid caps is higher than for large
caps, he notes. Moreover, German small and mid caps are currently trading at a P/E ratio of around 14, well below their long-term average.
“Attractive valuations of competitive companies are meeting structural growth themes. This creates an environment in which appealing opportunities continue to open up for active investors,” says Glück. For example, the growth of artificial intelligence is leading to rising investment in data centers and in energy supply. Companies in the semiconductor sector are also benefiting. In the defense sector, the long-term growth trend remains intact despite recent price corrections.
Infrastructure-related companies offer considerable upside potential,as the positive effects of government investment programs are only gradually becoming visible in the real economy. “The stock market has overlooked this opportunity so far,” says Glück.
