Simon Lutz in an interview with FuW: “Small-cap stocks now have strong upside potential”
Anyone who has been invested in U.S. technology stocks for some time should reduce the weight of these stocks in their portfolio, says Simon Lutz, Chief Investment Officer at Tareno. He continues to view the domestic stock market as attractive. Small-cap stocks, in particular, are expected to offer strong upside potential across all markets this year. Founded in 2000, Tareno—with approximately forty employees and 3.3 billion Swiss francs in assets under management—is one of Switzerland’s largest independent asset managers.
Can you name another segment of the market that you would be more likely to increase your exposure to?
In our view, small- and mid-cap stocks are likely to gain greater weight. Valuations for large-cap stocks have reached the upper end of the range, but valuations for small- and mid-cap stocks are generally below the historical average across all regions. In addition, earnings growth is likely to continue spreading and provide a boost to smaller stocks. This segment is also benefiting disproportionately from central banks’ interest rate cuts, the full impact of which has not yet been felt.
Can you name specific companies whose stocks you consider attractive?
Two names stand out—both are small-cap companies in the domestic healthcare sector, so they meet both criteria at once. These would be the dental company Straumann and the contract pharmaceutical manufacturer Siegfried.
Emerging-market stocks are often considered promising, not least because of the weak dollar. Is this also a good option for Swiss investors?
We’re invested in emerging markets, in part because this allows us to achieve additional diversification. Furthermore, we shouldn’t forget Japan—or Asia in general—as an attractive market. Last year, the stock markets in Taiwan and South Korea also delivered strong performance. Despite a strong year for Asian stock markets in 2025, there is still plenty of potential. Economic growth is solid, and valuations are starting from a lower level than in many Western countries. The weak dollar is certainly helping, and higher commodity prices are generally good for emerging markets as well.
In your opinion, what is a reasonable weighting for emerging market stocks in a portfolio?
It’s around 5%.
What about the geographical breakdown?
Switzerland accounts for about one-third of our portfolio. The U.S. also accounts for about 30%. The remainder is spread across Europe, Japan, and emerging markets.
However, the structural appreciation of the Swiss franc poses a risk for foreign investments, as currency movements erode returns.
It is indeed difficult for investors in Swiss francs; the appreciation of the domestic currency can throw a wrench in their plans. For example, the S&P 500 rose by over 17% last year, but when calculated in Swiss francs, the gain was just over 3%.
Will the dollar’s weakness continue?
Further dollar weakness is likely, though not to the same extent as last year. We expect a more controlled depreciation of the greenback, as it remains overvalued. However, we have been hedging the dollar’s currency risk for years, including on the equity side. Last year, this was extremely helpful and reduced volatility.
What percentage of their U.S. equity exposure do they hedge?
Strategically, we hedge about half of it.
What is your opinion on artificial intelligence—boom or bubble?
AI is a structural investment trend that will continue for many years to come. Expanding the necessary computing capacity will remain a key issue. Companies responsible for building and operating these data centers will benefit from this. And, of course, the entire semiconductor industry as well. In a subsequent wave, we see potential among end users, who will then be able to reduce costs and increase productivity. Companies in the software, industrial automation, healthcare, and logistics sectors will be particularly in demand here. Names like ABB, Kühne+Nagel, Roche, SAP, and Siemens come to mind.
There is cautious optimism regarding the European economy, primarily thanks to the large fiscal stimulus package in Germany. Has this already been factored into stock prices?
There are still concerns about whether the announced investment programs will actually be implemented. That’s often where things fall short in Europe. In addition, the competitiveness of European companies has suffered. However, if the recovery in the industrial sector takes hold, it could significantly boost profits and drive valuations higher. Thus, the outperformance of Europe that we observed last year could very well continue. Furthermore, small-cap stocks in Europe are still attractively valued.
What do you think of alternative investments?
Alternative investments are playing an increasingly important role in our asset allocation. In 2025, we increased their weighting in the overall portfolio from 12% to 17%, and this expansion occurred primarily in private-market investments. Here, we are focusing on private equity and infrastructure. So many structural trends—the energy transition, high government debt, digitalization, and the expansion of data centers—are driving infrastructure investments. We also believe it makes sense to rebalance our gold holdings to the strategic allocation due to the strong rally. We have invested approximately 6% of the total portfolio in this precious metal. Cryptocurrencies account for 2% of the portfolio.
Source: Finanz und Wirtschaft (FuW), Sylvia Walter, interview with Simon Lutz, Chief Investment Officer of Tareno AG, January 20, 2026.
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