Franck Sabbah at Germany-headquartered investment bank and boutique asset manager Berenberg shares his insights on investment opportunities in European small caps which have been outperforming this year, as well as in private debt.

In a background of geopolitical tensions and market volatility rising, Franck Sabbah, head of global management sales for Berenberg, discussed the benefits of investing in European small caps and outlined top stock picks in a recent interview with WealthBriefing. 

“European equities are benefiting from renewable energy and the energy transition,” Sabbah told this new service. “Small caps in Europe are driving activity. We stay focused on firms that are able to grow, with healthy balance sheets, and are under researched and undervalued.”

“Over the last 25 years they have delivered stronger performance than large caps. It shows small players can compete with big ones. It has been their best performing year in 2025, with firms less impacted by US President Donald Trump’s tariffs than expected,” Sabbah continued. “We invest mainly in tech, healthcare, industrials and a bit in financials. With geopolitical tensions and market volatility rising after Trumps tariffs, investors have been wanting to invest more in Europe.”

In recent months, a major theme – as heard by this news service – has been a shift by asset allocators into Europe and to some extent, emerging markets. Volatile markets, geopolitical worries and concerns of the concentration risk by Big Techs in the US has encouraged thoughts of how to diversify portfolios. (See a related article about how the business of asset allocation is changing.)

Berenberg European Micro Cap M
Funds include Luxembourg-domiciled Berenberg European Micro Cap M which aims to achieve long-term capital growth that outperforms the benchmark MSCI Europe Micro Cap Index over a medium to long-term period. The growth-orientated fund focuses on smaller companies with a market capitalisation up to €1 billion ($1.2 billion) based in Europe. Investments are made in niche companies that achieve sustainable and above-average growth over long periods with high profitability.

Top five holdings include Swiss-headquartered Kuros Biosciences which develops solutions for spine conditions and bone graft innovation, Sabbah said. It also includes Sweden-based manufacturer Hanza Holding and Danish life sciences firm Chemometec As Navne-Aktier DK. Another top holding is Swedish medical tech firm Raysearch Laboratories which specialises in developing software used in radiation therapy for cancer, and Sweden-based supplier of printed circuit boards the NCAB Group.

The firm highlighted that October defied volatility and political uncertainty, with the European Micro Cap outperforming its benchmark. Hanza rallied after it announced the acquisition of German BMK and reported third quarter results that beat targets. ChemoMetec outperformed and Kuros Biosciences jumped.

Berenberg European Small Cap M A
Funds also include Luxembourg-domiciled Berenberg European Small Cap M A classified under Article 8 of the Sustainable Finance Disclosure Regulation. It aims to achieve long-term capital growth that outperforms the benchmark MSCI Europe Small Cap Index over a medium to long-term period. The growth-orientated fund focuses on smaller companies with market capitalisation of up to €5 billion based in Europe that achieve sustainable and above-average growth over long periods with high profitability.

Top five holdings include Switzerland-headquartered Kuros Biosciences, Germany-listed financial technology provider Flatex Degiro, Italian metal producer Danieli Spa – Officine Meccani, and Italian wealth manager Azimut Holding Spa.

The firm said the European small cap outperformed its benchmark. Flatex Degiro climbed after a mid-October results presentation beat expectations and management again raised full-year guidance.

At a London media event, Julien Dauchez, head of client solutions group at Paris-based Natixis Investment Managers, also highlighted that the appetite for European small caps is more pronounced.

In addition, Sabbah drew attention to the benefits of private debt, saying it is a sweet spot for renewable energy. “We focus on renewables and the energy transition, notably wind, solar and battery storage,” he said. He believes that infrastructure debt is important, in particular, and will become more so.