European Small and Mid Caps Gain Momentum Amid Global Uncertainty

European equities are drawing increased attention from global investors, offering diversification benefits and attractive valuations. European small and mid caps (SMID) are particularly promising, according to Bellevue Asset Management's Birgitte Olsen. The MSCI Europe is trading at a forward P/E of 13x, significantly lower than the S&P 500. This discount, coupled with a 3.5% dividend yield, enhances the appeal of European stocks.

In recent years, public spending in Europe, especially in defense, has increased, creating a robust foundation for economic growth. This shift, alongside sectoral strengths in manufacturing and financials, buffers European indexes against geopolitical uncertainties.

SMID stocks, often overlooked, provide unique investment opportunities. They are locally rooted and less reliant on global supply chains. Continental European SMID stocks have shown a healthy return this year, supported by Bellevue's Entrepreneur Europe Small Fund. This fund focuses on owner-managed companies with innovation-driven models and resilient financials.