Euro small cap vs US small cap - the golf edition

1. How’s the form? Short-term form – US wins

The US small cap squad has shown flashes of brilliance in recent quarters. With rate expectations shifting and AI enthusiasm spilling over into smaller tech names, performance has picked up. In recent months, the Russell 2000 has outpaced its European counterparts , driven by a rebound in cyclical sectors and a more aggressive monetary pivot.  

Long-term form – Euro wins

Zoom out, and Europe starts to look like the more consistent performer. Since the early 2000s, European small caps have delivered steady returns, supported by strong governance, disciplined capital allocation, and a higher proportion of quality compounders. 

2. Time on the fairways

At Aberdeen Investments, experience counts. Just like seasoned golfers who know how to read the course, our European and US small cap teams favour well-established businesses with strong competitive positions and proven track records.

It’s no surprise our own teams experienced line ups.

3. Choosing the right club? 

Success on the course – and in small cap investing – depends on having the right tools for the job. We build diversified portfolios, with each company bringing its own unique growth driver to the bag.

With around 1,000 companies across 16 countries, the European small-cap universe is one of the most diverse, rich and exciting equity markets in the world. Different cultures, political systems and economic profiles make it prime hunting ground for active stock pickers. 

We build concentrated portfolios of 40-50 stock portfolio, where stock-specific risk is the key driver. Our style tilts towards quality, growth and momentum. We avoid stocks that are overly dependent on external factors like GDP growth, interest rates, or commodity prices.

Instead, we focus on structural growth stories where management execution is critical. Two names that showcase the diversity of our European portfolio? Games Workshop and Addtech.

Games Workshop

UK-listed Games Workshop (4.5% of portfolio) is the undisputed champion in tabletop gaming, best known for its iconic Warhammer franchise. The stock surged over 2500% in the past decade, powered by a unique vertically integrated model, exceptional brand loyalty, and consistently high financial performance – including gross margins around 70%.

Its Warhammer IP is deeply embedded in a global gaming community, driving repeat engagement and monetisation across retail, trade, and digital channels. Growth is fuelled by core momentum, licensing opportunities like the Amazon partnership, and digital platforms that deepen customer engagement.

Despite its success, the shares remain attractively valued, with strong fundamentals and upside potential. The first name on our team-sheet to face America.

Addtech

Sweden’s Addtech (4.2% of portfolio) is a leading industrial conglomerate, often dubbed a “mini-Berkshire Hathaway”, It brings together 150 independent, entrepreneurial businesses under one umbrella – each with strong positions in well-defined niches that demand high technical knowledge and content.

Addtech’s core focus areas offer solid growth potential, with a strong long-term runway supported by both organic expansion and strategic acquisitions.

A true all-rounder, Addtech is an invaluable member of any squad – combining depth, versatility and long-term consistency.

In the US…

With over 2,000 companies to choose from, the North American small cap universe is a vast and varied course. From domestic-focused firms to niche specialists and regionally dominant players, it offers a deep pool of opportunities—each with its own terrain and playing conditions.

Our approach? A tightly constructed 40–60 stock portfolio built around quality. We tee off with bottom-up stock selection, but macro winds do influence our overall positioning and sector weightings. We tend to steer clear of the more volatile hazards – cyclical earnings and binary-outcome biotechs – preferring steady, well-managed businesses with clear strategic direction.

Two standout names illustrate the breadth of our game.

REV Group

REV Group (3.3% of portfolio) is a leading US manufacturer of emergency vehicles – fire trucks, ambulances, and other frontline assets that play a vital role in public safety. The company has trimmed the fat, divesting non-core segments and sharpening its focus. Operational improvements have followed, and despite strong year-to-date performance (+67%), we still see value in the stock. A solid drive down the fairway.

e.l.f. Beauty

e.l.f. Beauty (2.2% of portfolio) is a fast-growing cosmetics and skincare brand known for high-quality, on-trend products at value prices. It’s a data-driven player, using consumer insights to fuel innovation and gain market share in the competitive US beauty space. With strong productivity in its core portfolio and expansion into adjacent categories and international markets, we expect e.l.f. to keep outperforming. A confident swing with plenty of follow-through.

How’s the course playing?

For both our European and American teams teeing off, conditions have been challenging. The course ranks among the world’s toughest – and right now, it’s playing even trickier for quality-focused investors. Lower-quality cyclicals have been in the ascendancy on both sides of the pond, making it harder for high-quality names to shine.

But as any seasoned golfer knows, tough conditions reveal true skill. Our teams remain focused, disciplined, and ready to play the long game.

Over the last 30 years, quality companies have consistently outperformed their value peers.  The chart below highlights high-quality US small caps versus low-quality names. Now those are returns to cheer about.

4. Who do you want over the final putt on Sunday? 

UK stalwart Diploma PLC (3.1% of portfolio) is a global distributor of industrial components – low-cost but critical to the end application, with products that are always in demand. 

Like Addtech, Diploma’s decentralised model fosters an entrepreneurial mindset and ensures the company remains agile, with decisions made close to the customer.

Diploma consistently delivers on earnings, driving the share price seven-times higher over the past 10 years. A clutch performer – and the one we want over the final putt on Sunday.

In the US, we have Wintrust – 2.9% of portfolio and a core small-cap bank holding for several years. The company operates primarily in markets surrounding the Great Lakes, with deep roots and a storied history in the Chicago area. 

Management's focus on delivering comprehensive, tailored solutions combined with exceptional customer service has enabled Wintrust to gradually gain market share over the field. Notably, Wintrust has increased tangible book value per share every year since going public in 1996 – a remarkable track record of consistent value creation. This sustained compounding is particularly impressive given the company's conservative lending standards, as evidenced by its exceptional credit quality. 

A steady hand under pressure, Wintrust is the kind of player you want when the stakes are high.

Final analysis: a game worth watching

No matter who comes out on top this month, the fans are in for a treat.

As for us, both our US and European small cap teams bring depth, diversity and long-term potential to the table. While short-term conditions may favour the more cyclical players, quality always finds a way to rise – especially when the conditions get tough.

We’re backing experience, quality management and proven track records. Whether it’s the precision of Games Workshop or the consistency of Wintrust, our line-up is built to perform – not just for one tournament, but for seasons to come.

So, who will win? We’ll have to wait and see. But one thing’s certain: we’ll be watching every single shot.

Why now for Team Europe?