Update on… Echiquier Agenor Mid Cap Europe | May 2026

Following a year of strong performance and high volatility, the financial markets began 2026 on a positive note. Whilst the start of the year was marked by hopes of a rebound in the European economy and the continuation of accommodative monetary policies, the conflict in the Middle East has reshuffled the deck: soaring oil prices have reignited inflationary fears, reintroducing the prospect of a more restrictive monetary stance. Yet, against this more uncertain backdrop, markets continued to climb to new highs, driven by rising commodity prices – led by energy – as well as the ongoing momentum surrounding AI. Above all, these geopolitical tensions have highlighted the need for Europe to strengthen its strategic autonomy and sovereignty.

In this environment dominated by geopolitical fears and concerns about the trajectory of the global economy, European small and mid-caps – having underperformed by nearly 17 percentage points over the 2022–2024 period – have, since the start of 2025, been performing on a par with large caps. The asset class nevertheless remains at historically low valuations, close to a 9% discount at the end of December 2025, compared with an average premium of 10–15% prior to the Covid period[1].

Operations

Over the past fifteen months, the management team has undertaken a significant repositioning of Echiquier Agenor Mid Cap Europe, with the aim of further reducing sectoral biases relative to the benchmark index whilst maintaining a rigorous selection of the highest-quality stocks within our universe. This work has resulted in greater diversification of performance drivers, through the initiation of exposure to sectors that were previously under-represented or absent, such as financials – via several European banks and insurance companies –, aerospace and defence, utilities and energy. At the same time, portfolio adjustments focused on stocks whose valuations appeared excessive and/or whose operational momentum was deteriorating, leading to a significant reduction in exposure to the healthcare sector.

These changes form part of a broader overhaul of the management process[2]: expansion of the investable market capitalisation universe, an increase in the number of holdings (from 30–35 to 50–55), a reduction in the weighting of the main positions (from 4.5% to 3.4%), the implementation of a stop-loss strategy[3], and the optimisation of cash management, now set at between 2% and 5% (compared with 5% to 10%).

In 2026, the fund’s strategy will focus on growth themes identified as key drivers: the AI revolution, which is driving exceptional growth in semiconductors and data centres; energy independence, with the need to electrify and decarbonise our societies; and aerospace and defence, which have entered a super-cycle of growth against a backdrop of global geopolitical instability following Russia’s invasion of Ukraine.

Since the start of 2026, Echiquier Agenor Mid Cap Europe – Class A has risen by 6.2%, compared with 5.6% for its benchmark index[4]. This outperformance confirms the soundness of the investment decisions made and the fund’s ability to generate relative value in a volatile market environment.

Investment strategy

The Echiquier Agenor Mid Cap Europe fund comprises high-quality stocks positioned within promising sectors which, in our view, offer strong visibility on the future growth of their earnings, regardless of an increasingly unpredictable macroeconomic cycle. With an average valuation of around 20 times earnings[5] and expected growth of over 16% per annum[6], the fund’s performance is designed to reflect, over the long term, the operational performance of the stocks held in the portfolio.

Data as at 30 April 2026.

Disclaimer. Past performance is not a reliable indicator of future performance. The sectors and stocks are mentioned by way of example. Neither their presence in the portfolio nor their performance is guaranteed. The opinions expressed in this document are those of the authors and do not constitute, in whole or in part, investment advice. LFDE shall not be held liable for these opinions. The fund is mainly exposed to the risk of capital loss, equity risk, the risk associated with investing in small and mid-cap equities and discretionary management risk. Investors should note that the shares described may not be available for sale in their country.

For more information on the characteristics, risks and fees of this fund and prior to any investment, please read the regulatory documents available on our website www.lfde.com.

[1] LFDE

[2] Changes not restricted by the fund prospectus

[3] A stock market order used to limit losses or lock in profits on a position

[4] MSCI Europe Mid Cap Net Return Eur. As at 30 April 2026. Five-year performance for Class A: -7.2%, compared with +42.2% for the index (MSCI Europe SM Cap NR until 31/12/2021; MSCI Europe Mid Cap NR EUR from 01/01/2022)

[5] Price-to-Earnings ratio (P/E ratio) for 2026

[6] Weighted average of expected earnings per share growth, for the securities in the portfolio between 2025 and 2028