Europe’s SmallCaps: back in business
European (ex-UK) SmallCaps are experiencing a marked recovery after four years of underperformance relative to LargeCaps. Having endured significant earnings contraction, capital outflows, and a prolonged valuation discount, they are once again attracting attention as both cyclical and structural tailwinds align.
If sustained, these trends could mark the beginning of a new cycle of outperformance for European SmallCaps, positioning them once again as a core allocation for equity investors.