Sector poised to outperform when recovery finally starts

Small-cap managers are taking advantage of cheap valuations to snap up bargains

Small-cap managers have been hit by illiquidity and volatility in the sector during the current economic crisis. "Volatility is our biggest problem," says David Clark, manager of the Ignis Smaller Companies fund. "That has been the biggest challenge with some of the extreme moves in share price." The market has got to the point, says Clark, where even the smallest piece of bad news in an otherwise positive statement sends share prices spiralling. "A price can go down 20%-25% in a matter of moments," he says. "It makes life extremely difficult." Giles Hargreave manages the Marlborough ...