In January, large-cap companies continued to outperform small caps, with the broad Stockholm stock exchange rising by 2.1 percent, while the large-cap index increased by about 5 percent. The global trend was also positive, with the world index up by 3.1 percent. In contrast, the small-cap index performed significantly weaker, falling by 4.2 percent.
Historically, however, small caps have outperformed large caps, as they have greater potential to grow rapidly over a long period, according to the managers. In today's uncertain environment, it is described as natural for investors to seek what are perceived as safer investments in large caps, while riskier small caps are sold off.
"This drives up demand for large-cap stocks and puts pressure on small caps, which in turn reinforces the narrative that large caps are safe and small caps are risky," the managers write.
When retail investors also see strong one-year charts for large caps but weak performance for small caps, the willingness to move capital from small-cap funds to large-cap funds increases, according to the managers.
However, they warn that this development is not sustainable in the long run. When valuations become too high and growth opportunities are limited, sentiment can turn quickly, often without a clear bottom. Conversely, for small caps: when sentiment does turn positive, interest can quickly increase and create a positive spiral.
The managers see several similarities with the dot-com bubble, with the difference that large caps have now taken the place of the IT companies of the past, while small caps rather correspond to the so-called “boring companies” from the old economy.
"We don't know when sentiment will turn – but we are confident about which category we believe in most for the next 3–5 years."
Among the biggest positive contributors during January were Flatexdegiro, ITAB, and RVRC, while Swedencare, Pandora, and Dometic weighed most heavily on performance.
In terms of portfolio activity, the fund reduced its holdings in Svedbergs and Flatexdegiro, while increasing exposure to, among others, Carasent, RVRC, Swedencare, Green Landscaping, Dometic, Proact, Inwido, and Bonesupport. The fund also took new positions in CAG Group and Idun Industrier.
The largest holdings in the fund's portfolio at the end of the month were Revolutionrace, Securitas, and Carasent, with weights of 4.9, 4.9, and 4.5 percent, respectively.
| Kavaljer Quality Focus, % | January, 2026 |
| Fund MM, change in percent | -6.1 |
| Fund one year, change in percent | -3.2 |
