BMC Global Small Cap Select June 2026

The best contributors to the fund's performance in June were FlatexDegiro, Palomar, and Covenant Logistics, while the weakest were United Natural Foods, Brinks, and USLM.

The month was one of sentiment-driven share price increases, with little company-specific news. A clear majority of the fund's holdings were up, and among the few that weren't, the negative effects were only limited. Three of the fund's largest holdings issued updates. TD Synnex's Q2 report showed profit growth of more than 50%, far surpassing the company's guidance and analyst expectations, with both the distribution and contract manufacturing divisions again benefiting from investments in AI infrastructure. United Natural Foods's Q3 report proved that its successful turnaround continues to bear fruit, with the refinanced loans, far lower debt/equity ratio, and solid cash flow implying significant share buybacks ahead. FlatexDegiro's forecast revisions showed the company's ongoing solid operational momentum during Q2, and even though the new forecast of around 25% profit growth for the full year is clearly higher (previously around 5–15%), there are opportunities for further upward revisions before fall.

Towards the end of June, we also saw a bid issued for one of the fund's smallest holdings, Nagarro. The company has, like many other IT consultancies, been traded down substantially this year owing to uncertainty regarding the impact of AI on its business model, despite these firms seeing themselves as key players when companies around the world implement AI into their operations. The remarkably high bid premium of more than 100% from a sector colleague also suggests that the AI threat the market sees is exaggerated, certainly when it comes to some types of IT consultants.

The first half of 2026 saw an especially strong equity market, despite geopolitical issues, conflict in the Middle East, shifting inflationary and interest rate expectations, and rapid sector rotation, all prompting significant price fluctuations. The AI expansion has continued to dominate as an equity market driver, with companies exposed to AI infrastructure, semiconductors, and data centers seeing robust performances. The equity market's focus and the concentration of performance around the AI theme increases the risk, however. In such a market, diversification is especially important. The fund's three largest contributors to returns illustrate the value in investing in companies with vastly different value drivers: Covenant Logistics benefits from the structurally increasing freight rates in the US, while United Natural Foods has performed well thanks to internal improvement measures, and Everus Construction has benefited from the accelerating investment cycle for AI infrastructure and the energy grid. 

Key market events and trends

The first half of 2026 ended with MSCI ACWI up 14% in euros. This return was largely created during the second quarter, when the index rose by 16%, making this one of the strongest quarters of the past 25 years. The first quarter was weakened by geopolitical unrest in the Middle East and sharply rising energy prices, with the stock market lifting once these tensions eased.

The half year can be characterized as a market in constant rotation: gold and silver were in the lead initially, followed by oil and gas in March, as the war with Iran dominated. From April, AI infrastructure, memory chips, and semiconductors were at the forefront, while SpaceX's record IPO in June spurred positive sentiment further. The semiconductor sector rose by 88% in the second quarter, thanks to solid profit growth in Micron, Samsung Electronics, and SK Hynix.

AI remains the dominant driver in the market. Data centers are being built at an extraordinary pace across the globe, and AI-driven products are increasingly woven into everyday life, a definitive sign that this is a structural trend sooner than a transitory theme.

It is worth noting that the solid boost to the market in the second quarter was created by only a handful of companies. The market breadth (the number of companies in the index driving the returns) is typically at 35–60%. During Q2 2026, it was at an unusually low figure of some 25%.

It is positive that the fundamentals of global companies as a group continue to strengthen. At the start of 2026, the market forecast profit growth of around 14% on average for the MSCI World index. This has since been revised upward to 22%, with expected profit growth of a further 14% for 2027.

Portfolio changes

During June, we sold off a couple of Special Situations that had reached our targets and a few smaller positioners for which future prospects and visibility had worsened somewhat owing to prevailing geopolitical developments. We sold Alior Bank, Garret Motion, Leons Furniture, and Patrick Industries.

The fund's positioning

The fund now comprises 36 companies exposed to a range of sectors and geographies, with companies chosen on their own merits. We believe a concentrated but also diversified, actively managed small cap fund focused on stockpicking has all the prerequisites to deliver great returns to its unitholders over time.

* MSCI ACWI Small Cap NTR $ in EUR