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GAM Swiss Small & Mid Cap Equity

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GAM Swiss Small & Mid Cap Equity invests in small- and medium-sized Swiss companies. The investment strategy is based on the conviction that investment returns are a result of the companies’ success over time. Therefore, the strategy focuses on firms that have a clear vision, customer-driven innovation and consistent execution capabilities that differentiate them from their competitors. Sustainability plays an integral role in investment decisions. We see it as a strong differentiator and an important value creation opportunity for firms.

Our Edge

Investing like a business owner

Over more than two decades the team nurtured an integrated investment approach that relies on investing in companies with outstanding business characteristics. It judges each investment opportunity from three mutually beneficial perspectives: i) management quality and competitive position, ii) sustainability iii) as well as capital returns and growth. The team’s analytical rigour enables the portfolio manager to run a focussed portfolio with a low turnover.

Deep knowledge of sustainable investing

Over time team members have documented hundreds of company interviews and visits dedicated to sustainability and built a unique know-how about Swiss companies and sustainable investing. They are committed to foster and support sustainable corporate management, by engagement and diligent execution of voting rights.

Award-winning

The team's success in the area of sustainable investing was demonstrated in 2020, as well as in 2022, when another fund the team manages, applying the same process and strategy, was awarded "2020 Best Swiss Equities" and “2022 Best Swiss Equities” at the Swiss Sustainable Funds Awards. In its statement, the jury highlighted the portfolio's sustainability features as well as its excellent investment return. Furthermore, the same fund won the Lipper Awards in Switzerland in 2022 in the Swiss Small & Mid Cap category for its performance over three and five years. In Germany, the GAM Swiss Small & Mid Cap Equity CHF - B, a fund with broad European registration, was awarded the Refinitiv Lipper Germany Fund Award in 2021 and 2022 for its three and five year performance.

Investment Team

GAM Swiss Small & Mid Cap Equity is led by Thomas Funk, who has managed the strategy since 2005. He works with Daniel Häuselmann, Head of Swiss Equities, and Dr. Karl Herzog who is responsible for sustainable development research. Each team member has over 20 years experience in the Swiss stock market and over 15 years’ tenure with GAM.

The team’s location in Zurich enables them to conduct their own in-depth research onsite and generate their own insights, independent of external  research providers.

The team is responsible for research, portfolio management, trading and risk management. However, an independent risk oversight function is performed additionally by GAM’s risk teams.

 
Sustainability is key to the long-term competitiveness of companies. When we invest in the right companies, time is on our side.
Thomas Funk, Investment Director
Thomas Funk
Investment Director
Daniel Haeuselmann
Head of Swiss Equities
Karl Herzog
Sustainable Systems Expert

Philosophy and Process 

Trends in the economy, valuations, interest rates and investment opportunities are changing over time. Therefore, the investment team follows a series of indicators to fit the portfolio to the prevailing investment environment. This can lead to changes in portfolio composition. Such shifts are gradual and most of the time slow. However, the dominating source of return is sought in companies that have the ability to find a sustainable way to boost economic profits.

Capital returns and reinvestments in the business drive economic profits over time. To understand the underlying factors the team conducts extensive research covering the quality of a firm’s management, its market position in the value chain and its ability to compete. Sustainability is fully integrated in the analysis and reveals how well a company adapts to its ecological and social context, and whether it has the organizational prerequisites to be able to evolve in a competitive environment.

The team’s proprietary approach of sustainable development research has been created more than 20 years ago by Dr. Karl Herzog. It is based on general organizational patterns derived from living nature. We analyze around 90 companies across a 3-year cycle. 

1

Investment environment

  • Analysis of valuations, indicators and the economic cycle
  • Define attractive segments based on the Swiss market characteristics eg growth firms, defensive or cyclical companies
2

Stock selection

  • Looking at each company from 3 mutually beneficial perspectives: Business model, sustainability, return on capital and growth
  • Understand the value drivers of each company and its potential to evolve
3

Portfolio construction

  • Select stocks for a long holding period, combination of different value drivers, fit the portfolio to the investment environment
  • Construct a diversified portfolio of 30 – 50 stocks that aims to outperform the benchmark on a 3-year time frame

Reasons to Invest

Corporate landscape

Switzerland and its stock market is characterised by a unique concentration of companies, which have evolved into strong international players.  As the home market for Swiss companies is small, they are forced to go abroad at an early stage of corporate development giving them valuable experience for successful geographical expansion. High labour costs make it expensive to operate in Switzerland. However, this is more than compensated for by an outstanding level of education and a flexible labour market. The Swiss school and university system ensure that not only an elite can achieve a high level of education but ensures a high skill level through the population.

Crises create opportunities

Several economic crises and the strong Swiss Franc have led a number of Swiss companies to rethink their business by reducing costs, concentrating on the core and promote innovation to boost growth. This creates opportunities to invest in companies that shape or run a high value-added business and strive to expand further through secular growth trends, market share gains and/or geographical reach.

Sustainability

Especially younger generations are paying increasing attention how companies from which they buy or for which they work fit into their ecological and social context. Thus, a firm's competitive position benefits strongly if its management applies principles of sustainable design as they open new ways to structure companies, design business processes and create products.

Key Risks

Capital at risk 

All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

Currency Risk [non base currency share class] 

Non-base currency share classes may or may not be hedged to the base currency of the Fund. Changes in exchange rates will have an impact on the value of shares in the Fund which are not denominated in the base currency. Where hedging strategies are employed, they may not be fully effective.

Single Country Risk 

Investment in companies of a single country may be subject to greater political, social, economic and tax risks and may be more volatile than investments in more broadly diversified funds. Local tax law may change retrospectively and without notice. 

Equity 

Investments in equities (directly or indirectly via derivatives) may be subject to significant fluctuations in value.

OuR Thinking

Active Thinking
Active Thinking: Applying Swiss precision to a global investment opportunity set.
23 February 2024

Swiss companies’ reach is probably more global than you realise. Daniel Häuselmann discusses how a combination of Switzerland’s stability and mindset of excellence through innovation have helped Swiss companies to become leaders on the world stage.

Outlook 2024
Outlook 2024: Daniel Haeuselmann (Swiss Equities)
December 2023

Swiss equities – Pricing power will become even more important

Fund Information

Contact Us

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Speak to one of our client directors

If you wish to talk to a member of the team, please click the button below for their contact details.

 

 

Speak to a member of the team

Further Information on our Swiss Equity Funds

Sustainable investments in the light of the Corona crisis

December 2020

GAM Wins Swiss Sustainable Funds Award

June 2020

Reflections on 20 Years of Sustainable Investing

October 2019

Contacts

Please visit our Contacts and Locations page.

The fund is a contractual investment fund according to Swiss law, of the type ‘other funds for traditional investments’. The registered office of the fund management company is GAM Investment Management (Switzerland) AG, Hardstrasse 201, 8005 Zurich.

Disclaimer: Past performance is not an indicator of future performance and current or future trends. The indications could be based on figures denominated in a currency that may be different from the currency of your residence country and therefore the return may increase or decrease as a result of currency fluctuations. Capital at risk: all financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed. Any reference to a security is not a recommendation to buy or sell that security.