Too hot to handle? EU small caps five years from the bottom

Europe's small caps have had a stonking five-year rally, but as prices have come off a little since May, investors need to start separating Norway from the Netherlands, explains Bill Barker from Pictet Asset Management.

After securing exceptional gains in the past five years, small-cap investors should now narrow their focus to stocks that can reap the rewards of structural reforms in the eurozone, a turnaround in the global M&A cycle and a recovery in emerging economies. Forefront of the rally Small-cap stocks have been at the forefront of an equity market rally which started in March 2009. The MSCI Europe Small Cap index has risen 138% in the past five years, compared with the wider MSCI Europe index which has gained 73% since 2009. While investors worry the rally may lose momentum as prices cre...