Small Caps, Big Potential
Why smaller companies could offer stronger returns in the years ahead
Why we invest in small caps:
Strategic asset allocation is at the heart of how we invest. We use it to set a long-term framework for delivering returns by spreading risk across a broad mix of assets, from equities and bonds to property and alternative investments. Within this framework, smaller companies (or small caps) have an important role to play.
While they tend to be more volatile in the short term (their share prices can move around more than larger companies), small caps also offer exposure to a different set of risks and opportunities than larger companies. That makes them useful for diversification, helping to smooth out returns across the whole portfolio. Although small caps don’t outperform all the time, history shows they’ve often delivered stronger returns than large caps during the right environment.
