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Professional Investor - Netherlands
8 October 2026

Time is of the essence

Looking beyond valuations to understand small-cap performance

Over the last decade, European small-cap companies have been at least as successful in growing earnings per share as their European large-cap peers. Yet the returns delivered by the asset class have been markedly different from the underlying business performance. What happened?

In the latest edition of Market Musings, we examine this disconnect and look at the role that valuation has played in shaping investor returns.

Like driving a car, investing is primarily a forward-looking discipline. Looking ahead, we believe the current valuation gap between European small and large caps presents an attractive opportunity for long-term investors. 

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Disclaimer
 
Van Lanschot Kempen Investment Management (VLK IM) is licensed as a manager of various UCITS and AIFs and authorised to provide investment services and as such is subject to supervision by the Netherlands Authority for the Financial Markets. This document is for information purposes only and provides insufficient information for an investment decision.
 
As asset manager VLK IM may have investments, generally for the benefit of third parties, in financial instruments mentioned in this document and it may at any time decide to execute buy or sell transactions in these financial instruments.
 
This document has been produced independently of the companies mentioned, and the views contained herein are entirely those of VLK Investment Management.
 
This document does not contain investment advice, no investment recommendation, no research, or an invitation to buy or sell any financial instruments, and should not be interpreted as such. The opinions expressed in this document are our opinions and views as of such date only. These may be subject to change at any given time, without prior notice.
 
General risks to take into account when investing in small-cap strategies
 
Please note that all investments are subject to market fluctuations. Investing in a small-cap strategy may be subject to country risk, equity market risks and small-cap company risk, which could negatively affect the performance. Under unusual market conditions the specific risks can increase significantly.
 
Potential investors should be aware that changes in the actual and perceived fundamentals of a company may result in changes to the market value of the shares of such company. Equities of companies with small capitalization can be more volatile than equities of mid and large companies and may also be less liquid.
 
Capital at risk
 
The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested. Past performance provides no guarantee for the future.
Il y a un dicton en néerlandais, Kom verder, qui ui signifie beaucoup de choses, et c'est notre philosophie d'entreprise. Il reflète la façon dont nous travaillons avec nos clients, mais aussi la manière dont nous dirigeons nos entreprises participantes pour créer de la valeur pour les actionnaires grâce à un engagement actif.

Risque de perte en capital. La valeur des investissements et des revenus qui en découlent peut évoluer à la hausse comme à la baisse. Les investisseurs sont susceptibles de ne pas récupérer l’intégralité de leur investissement initial. Les performances passées ne présagent pas des performances futures et ne sont pas constantes dans le temps.