In September 2017 the Fund was up 4.0% versus a 4.5% increase of the benchmark. In terms of absolute performance, September was a strong month. The index, however, returned 50bps more than the Fund. Weak stock picking in the IT sector was the main explanation for the underperformance in September. YTD the Fund is up 4.9% (I-Class after costs) versus a MSCI World Small-cap benchmark return of 4.0%.. Our value tilt has been a significant headwind YTD. The MSCI World Small-cap Value index is only up 0.9%.

Three top contributing stocks during the month of September were American Eagle Outfitters (+20%), Trinity Industries (+11%), and Chart Industries (+17%). American Eagle Outfitters reported solid results in August and the stock continued its recovery probably based on these results. The main news flow in the month of September was the announcement of a multi-year license agreement with the Aditya Birla Group in India. The first stores are expected to open in Mumbai and Delhi in spring 2018. Our view remains that the market underappreciates the strength of both the American Eagle and the Aerie franchise. The shares of Trinity Industries increased by 11% in September. Trinity is the largest producer of freight railcars in the US and also owns a broad lease fleet. After several poor years, Trinity benefits from a recovery in the demand for new equipment. Just after the month close, Trinity reported to have won a legal case from the past, sending the shares up another 10%. We believe Trinity is a well-managed company with leading business activities that is still undervalued. With improving earnings momentum and the legal overhang being substantially reduced, we see further upside potential in the shares. Chart Industries saw its share price rising by 17% in September, without any particular news except that Chart completed the previously announced acquisition of Hudson Products. We believe this acquisition will be beneficial for Chart as it strengthens the product range, adds a recurring maintenance component, diversifies into non-LNG markets and brings cost and revenue synergies. We regard the valuation of the deal as attractive.

Negative contributors in September were Tech Data (-19%), Opera Software (-7%), and Jabil (-8%). Tech Data reported disappointing quarterly results early September. The timing was unfortunate shortly after the Avnet TS acquisition. Management needs to rebuild its strong reputation with a few solid quarters. Opera Software's stock price remained weak in September after reporting disappointing results in August. In our view the stock is significantly undervalued. Opera is a holding company with 4 independent assets. The value of these assets is in our view far higher than what the market currently discounts. Jabil reported solid quarterly results at the end of September. The stock was weak in the period before reporting these results. Investors likely took some profits after a strong run up in the past 18 months.

Furthermore assets under management increased further from €235m to € 272m in September.

The Fund invests world-wide in smaller companies (small-caps). One attractive feature of small-caps is that they are generally monitored by a small number of analysts, which leaves plenty of opportunity to add value as active investors. When looking for new investment opportunities, screening is applied to reduce the investment universe to a manageable size of 500 companies. We screen for companies that are of above-average quality and that are attractively valued. Extensive fundamental analysis is done on both existing portfolio companies and new portfolio candidates. This includes analysis of the company’s public filings (like annual reports) and comprehensive dialogues with the management teams of companies that we invest in. For each stock we base our investment decision on an extensive investment case, which is supported by a proprietary financial model. ESG topics (Environmental, Social and Governance) are fully integrated in our investment process. The result is a well-diversified portfolio of 60-90 companies spread across sectors and regions. Many portfolio companies have leading positions in the niche markets in which they operate. The companies in the portfolio typically have robust balance sheets and high returns on capital employed, which indicates that these companies are structurally capable of increasing shareholder value via their operations. The portfolio has a more attractive price earnings ratio versus the benchmark.