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Asset Managers Focus on Singapore's Small & Mid-Cap Potential

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  Published in Stocks and Investing on Friday, January 2nd 2026 at 2:26 GMT by The Straits Times

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Riding the Tide: Asset Managers Eye Growth in Singapore's Small & Mid-Cap Sector

Singapore's investment landscape is undergoing a subtle but significant shift, as asset managers increasingly turn their attention to the often-overlooked realm of small and mid-cap companies. Two prominent players, Amova Investment Management and Eastspring Investments, are actively targeting growth within this sector, believing it holds untapped potential despite recent market headwinds and evolving investor preferences. The Straits Times recently highlighted these strategies, revealing a nuanced approach that balances risk and reward in the current economic climate.

Why Small & Mid-Caps? A Case for Potential

For years, Singapore’s investment scene has been dominated by large, blue-chip companies – names like DBS, Singtel, and CapitaLand. These established giants offer stability and are often favored by conservative investors. However, Amova and Eastspring see compelling reasons to look beyond this familiar territory. Small and mid-cap companies (typically defined as those with market capitalizations between S$200 million and S$3 billion) possess several characteristics that make them attractive for long-term growth.

Firstly, they often exhibit higher growth potential than their larger counterparts. Smaller businesses are typically more nimble and adaptable, able to capitalize on emerging trends and niche markets more effectively. They're also less burdened by legacy systems and bureaucratic processes, allowing for faster innovation and expansion. Secondly, these companies frequently trade at a discount compared to larger firms, offering the possibility of significant capital appreciation as they mature and gain wider investor recognition. Finally, the relative lack of analyst coverage often means these stocks are undervalued due to inefficiencies in price discovery – opportunities that skilled managers can exploit.

Amova's Focused Approach: The "Hidden Gems" Strategy

Amova Investment Management, a boutique fund house known for its concentrated investment style, is particularly bullish on Singapore’s small and mid-cap space. Their approach centers around identifying “hidden gems” – companies with strong fundamentals, solid management teams, and compelling growth stories that are currently overlooked by the broader market. They focus heavily on bottom-up research, meticulously analyzing financial statements, conducting industry assessments, and engaging directly with company management to gain a deep understanding of their businesses.

According to Amova’s chief investment officer, Ivan Tan, they're actively seeking companies in sectors like technology, healthcare, and consumer discretionary – areas poised for continued growth within the Singaporean economy. Tan emphasizes that their strategy isn’t about chasing short-term gains but rather building a portfolio of high-quality businesses with sustainable competitive advantages. This long-term perspective allows them to weather market volatility and benefit from the compounding effect of growth over time. A key element of Amova's approach is a willingness to invest in companies that are currently out of favor, believing these periods represent opportunities for exceptional returns when those companies eventually realize their potential.

Eastspring’s Broader Mandate: Balancing Growth & Stability

Eastspring Investments, the asset management arm of Prudential Singapore, takes a slightly different but complementary approach. While also recognizing the growth potential of small and mid-caps, Eastspring's investment mandate is broader, encompassing a wider range of asset classes and risk profiles. They incorporate smaller companies into their portfolios as part of a diversified strategy aimed at enhancing overall returns while maintaining a degree of stability.

Eastspring’s portfolio managers are actively seeking opportunities within the small and mid-cap space but remain mindful of the inherent risks associated with these investments. They prioritize companies demonstrating financial prudence, strong corporate governance, and sustainable business models – qualities that can help them navigate economic uncertainties. Eastspring also benefits from Prudential's extensive global research capabilities, allowing them to gain a broader perspective on market trends and identify potential investment opportunities.

Challenges & Considerations in the Current Market

While the outlook for Singapore’s small and mid-cap sector appears promising, both Amova and Eastspring acknowledge the challenges that lie ahead. Rising interest rates, persistent inflation, and geopolitical uncertainties are creating a more cautious environment for investors. These factors can impact company earnings, compress valuations, and increase market volatility.

Furthermore, liquidity concerns remain a significant consideration. Small and mid-cap stocks tend to be less actively traded than their larger counterparts, which can make it difficult to buy or sell large positions without impacting the share price. This illiquidity premium is often factored into valuations, reflecting the added risk for investors. Finally, the relatively limited coverage by analysts means that these companies are more susceptible to negative surprises and sudden shifts in investor sentiment.

The Future of Small & Mid-Cap Investing in Singapore

Despite these challenges, both Amova and Eastspring remain optimistic about the long-term prospects for Singapore’s small and mid-cap sector. They believe that as the economy continues to evolve and mature, these companies will play an increasingly important role in driving innovation, creating jobs, and generating wealth. The increased focus from specialized asset managers like Amova and the broader inclusion of these stocks within diversified portfolios managed by firms like Eastspring suggests a growing recognition of their value proposition. Investors looking for potentially higher returns and diversification benefits should consider exploring opportunities within this dynamic segment of Singapore's investment landscape – but with a clear understanding of the associated risks and the importance of long-term perspective.

I hope this article provides a comprehensive summary of the original Straits Times piece, incorporating additional context and analysis.