February of this year marked one of the best months in the nearly 12-year history of stock-picking hedge fund Symmetry Invest with an advance of 10.8 percent. While the fund has posted double-digit returns on multiple occasions, this time the performance stood out because, as founder and portfolio manager Andreas Aaen puts it, “the portfolio did everything it was designed to do.”

“The portfolio did everything it was designed to do.”

Symmetry Invest, a concentrated long/short equity fund specializing in small-cap stocks, advanced 10.8 percent in February, while its benchmark, the MSCI EU Small Cap Index, remained virtually unchanged. While Symmetry Invest has posted double-digit returns in individual months on several occasions since its inception in early 2013 – during which the fund delivered an annualized return of 18 percent, February’s performance stood out due to a combination of factors aligning perfectly for its strategy.

A Standout Month for Symmetry Invest

Aaen highlights four key aspects of the fund’s February performance. “First, we made money on both long and short positions simultaneously.” He further emphasizes that the fund provided real risk diversification for investors, noting that the Nasdaq, for instance, fell four percent during the month. Importantly, he stresses that the returns were achieved “the right way” – by investing in undervalued value stocks. Lastly, he points out that the gains were broad-based, stating, “Our return was not driven by a single winner, but a wide range of positions.” Despite the strong performance, Aaen remains grounded, adding with a touch of humor, “We don’t dance around on tables thinking we can walk on water.”

Symmetry Invest delivered annual returns of around 40 percent for three consecutive years following a difficult 2018. However, a 16.4 percent loss in 2022 was followed by a more tempered recovery, with gains of 15.4 percent in 2023 and 9.7 percent in 2024. So far in 2025, the fund is already up 11.7 percent in the first two months of the year. “We all know that we didn’t suddenly wake up on February 1st and suddenly decide to be good investors. The return in February is the result of the hard effort we have made over the past many years,” says Aaen. “Sometimes the results come slowly – other times, like now, they come quickly.”

“The return in February is the result of the hard effort we have made over the past many years. Sometimes the results come slowly – other times, like now, they come quickly.”

Aaen further highlights the cyclical nature of Symmetry Invest’s return generation. “People who have followed us for a long time also know that our strategy works in waves – and that the returns come strong when the   starts,” adds Aaen. While pleased with the fund’s strong performance in February, Aaen is even more optimistic about the future. “We do not see this as a time to stop and celebrate a success. On the contrary, we see this as a time to roll up our sleeves even more, pull on our work clothes, and work even harder to capitalize on the momentum we have,” says Aaen, who has led Symmetry Invest for 12 years. “For us, it is just the start of a new trend that could potentially last for several years.”

A Shifting Market Landscape Favoring Small Caps

Aaen partially attributes this emerging trend to a reversal in capital flows, with funds shifting away from passive instruments – particularly those focused on U.S. tech stocks – and returning to active management and overlooked areas of the stock markets, such as small-cap stocks. “Over the past five years, the Nasdaq has risen 120 percent, while the MSCI Small Cap Index has risen just 24 percent,” he notes. However, Aaen sees signs of a meaningful shift in sentiment and capital allocation. “In the past two months, we’ve witnessed a real shift in sentiment and money flows. February 2025 was a step in the right direction, but there’s still a long way to go,” he adds.

“In the past two months, we’ve witnessed a real shift in sentiment and money flows. February 2025 was a step in the right direction, but there’s still a long way to go.”

“Because the Magnificent Seven stocks have gone up so high and thus occupy such a large share of the market – and because small caps have gone down so far and occupy so little – it takes almost nothing to move our small caps significantly upwards,” explains Aaen. He points out that even a small outflow from the Magnificent Seven into European small caps could be enough to lift those stocks by 10 to 20 percent.

Another key metric Symmetry Invest tracks is the potential upside in its portfolio – the weighted upside of its holdings. As of today, the portfolio still has a 138 percent upside. “This is slightly less than the 146 percent at the beginning of February, due to the high returns, but remains well above our historical average of around 100 percent and higher than the 118 percent we saw at the beginning of 2024,” he concludes.