NextGen Global Small-Cap Equity ETF

Small-cap equities have long been associated with growth potential and diversification, but have been out of favor for much of the past decade. That may be changing, and our new active ETF aims to make the most of the opportunities.

The investment case for small-cap equities

Small caps offer breadth, diversification and structural inefficiencies that systematic investors are well positioned to capture. Our NextGen Global Small-Cap Equity ETF builds on our established quant heritage and enhances it with machine learning, designed to identify deeper patterns within one of equity markets’ most under-researched universes.

While small caps have outperformed large caps over the last 20+ years (see Figure 1), they have been lagging since 2018. However, Figure 1 also reveals that changes in relative valuations between these segments were the main reason for this underperformance.

Figure 1 – Relative performance and valuation of small vs. large caps (Developed Markets)

Past performance is no guarantee of future results. The value of your investments may fluctuate.
Source: Robeco, MSCI, LSEG. The figure shows the relative performance and valuation of the MSCI World Small Cap Index vs. the MSCI World Index. Performance is measured via the total return index (in USD), and the relative valuation is based on four bottom-up-calculated multiples (price-to-book, forward price-to-earnings, price-to-cash EPS, and price-to-dividend). For each multiple, the valuation ratio of the MSCI Small Cap Index is divided by the same valuation ratio for the MSCI World Index. The sample period is March 2003 to December 2025.

Targeting small-cap alpha with an ML-based approach

Differentiation with AI techniques
Established capability to systematically select from the highly diversified global small-cap universe.
Alpha powered by decades of quant research
Built on Robeco’s long-standing research across various established and next-gen alpha signals.
Additional information edge from ML data
Innovative data-driven models analyze a large number of variables to capture more complex return drivers.

Benchmark-aware, ETF-delivered exposure

The strategy is implemented within clearly defined risk guardrails, including sector and regional constraints and disciplined turnover management. Delivered through an active ETF wrapper, it provides liquid and transparent access to AI-enhanced small-cap exposure, while maintaining moderate tracking error.