Small caps missing out on risk rally, says top manager

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Citywire AAA-rated manager Hilmar Langensand has begun 2013 with a shift towards more defensive stocks in his €293 million small and mid-cap fund.

Langensand, who was ranked 17th in Citywire 1000, undertook a series of changes in his zCapital Small and Mid-Cap fund over the course of January.

The Zug-based manager acknowledged an increased risk appetite among equity investors since the beginning of the year but said large caps had benefitted most. Small and mid-caps, he said had not kept pace in investment terms.

Therefore, he had opted to allocate more money to defensively-orientated stocks in order to ensure the portfolio was positioned to weather any difficulties.

‘We only invested some of the new money, and even then very cautiously,’ he said in an investor note. ‘We bought shares in the real estate companies Swiss Prime Site and PSP following a phase of underperformance.’

‘We also built up our position in Implenia. Lindt & Sprüngli impressed markets with better than expected organic sales growth in 2012, and we therefore increased our shareholding.’

Swiss Prime Site, which is a real estate investment firm, is now the fifth biggest holding in Langensand’s fund, accounting for 3.2% of the portfolio. Chocolatier Lindt & Sprüngli is now the fund’s third largest holding at 4.5%.

‘We took profits in GAM and Tecan after the share price rallied. We further reduced our exposure to Logitech and Gategroup in response to the disappointing business performance,’ he said.

The zCapital Swiss Small & Mid Cap fund returned 18.65% in the three years to the end of December 2012. This is while its Citywire benchmark, the Swiss Performance Index Small & Mid TR, rose 11.28%.