Chronology·3 articles·2025 – 2026
Small Caps: Opportunities and Risks in Europe and the United States Amid Macroeconomic and Technological Dynamics
Updated 2026-02-01·Source: MoneyRadar Briefs, Notes, Reports & Videos
The analysis of small-cap companies reveals contrasting dynamics between the United States and Europe. In November 2025, American SMEs are perceived as a key growth driver for 2026, primarily due to productivity gains linked to artificial intelligence, justifying a positive recommendation on the Russell 2000. A month later, in December 2025, attention shifts to European Small Caps, considered a risky but potentially highly rewarding bet due to their historical discount and a potential for 're-rating' linked to strengthened growth, the German recovery, the diffusion of AI, and potential structural reforms. However, in February 2026, the uncertain geopolitical environment and the need for increased selectivity in Europe lead to a strategic revision. Exposure to German SMEs is removed from the portfolio, with the analysis preferring to focus on more resilient and strategic European sectors such as healthcare and technology to play the sovereignty theme. This evolution underscores the importance of a flexible and opportunistic approach in the face of changing contexts.
Reduction of Exposure to German SMEs Amid Uncertainty
Exposure to German SMEs is removed from the portfolio due to the need for greater selectivity in Europe and a preference for sovereign themes such as healthcare and tech.
Methodology
Re-evaluation of the asset allocation framework and convictions in the face of an uncertain geopolitical environment and D. Trump's announcements.
Key findings
- The current environment necessitates high selectivity on the European continent, favoring geographical diversification.
- The removal of the ETF focused on German SMEs aims to simplify the portfolio and position it in healthcare and tech to play the sovereignty theme.
- Exiting this position is done at breakeven thanks to the rebound in recent sessions.
Investor implications
Reducing exposure to German SMEs and focusing on more resilient and strategic European sectors, such as healthcare and tech, is a prudent strategy in the face of macroeconomic and political uncertainty.
2026 Outlook: American SMEs, Tomorrow's Growth Engine
American SMEs are identified as the primary beneficiaries of the surge in AI-related productivity gains, justifying an investment in the Russell 2000.
Europe: Should We Bet on Small Caps Despite the Risks?
European Small Caps are considered a risky but potentially interesting bet due to their historical discount and a possible 're-rating' linked to growth and AI.