Passion for Swiss equities

zMonthly SMC Fund 10/2022

Monthly report October 2022 of the zCapital Swiss Small & Mid Cap Fund (class A)

The fund advanced 3.4% in October (SPI Extra +4.1%). We reduced our exposure to Lindt & Sprüngli and Straumann, while buying some shares in VAT Group again for the first time in a long while.

Equity markets had a strong start in the closing quarter, firstly on account of a technical countermovement and secondly due to weaker-than-expected economic data. This fuelled hopes that an economic slowdown could curb the pace of rate hikes. Stock markets were additionally buoyed by comments from several Fed officials indicating that the US central bank could slow the pace of monetary tightening slightly. ECB chief Lagarde's comments were also interpreted along the same lines.

The third-quarter reporting season provided interesting insight into the real economy. It has become clear that companies in the same sector are reacting to the same difficult general conditions in different ways. It was also apparent that inventories have been ramped up and delivery times reduced. The pricing power of the companies is likely to decline and the risk of shrinking margins is likely to increase.

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