The strong performance potential of Swiss small and mid-cap equities

Swiss small and medium-sized listed companies have long delivered higher performances than the wider Swiss stock market index. Since 2000, the SPI Extra, the index that tracks Swiss SMID-caps, has delivered 454% in total return, compared to a 231% total return for Switzerland's wider stock index, the SPI. 

Swiss SMIDs have also proved to be resilient since the start of the pandemic. In fact, despite a bigger drawdown and a somewhat faster correction in difficult markets, the SPI Extra has recovered quickly and outperformed the SPI index by a strong margin since early 2020.

An improving value-creation profile

The strong performance of the Swiss SMID-cap segment has been driven by an improving value-creation profile, as assessed by the CFROI®¹  spread (CFROI® minus the cost of capital). This measure, which enables investors to gauge a company’s value-creation ability, has shown a stronger trend for the SPI Extra than for the SPI over recent years.

The increasing integration of ESG criteria has also been an enabler of value-creation, as Swiss companies have little exposure to value-destructive industries or activities such as energy or automobiles.

Participation in post-pandemic recovery

• Good pricing power in their respective end-markets
• Profitable and flexible supply chains
• Leading niche market positions
• Strong value-added products with high margins 
• Significant innovation 
• Market shares in growing market segments. 

¹Cash Flow Return on Investment, source Credit Suisse HOLT