Miton's Williams: 'It is rare to see a valuation differential so steep'

Despite the recent underperfomance of the small-cap sector, Gervais Williams, managing director of the Miton group and manager of the recently launched Miton UK MicroCap trust, argues in a world where growth has stalled, it can be a big advantage to be small

With the FTSE 100 index having risen through 7,000 this year, most investors have enjoyed a good start to 2015. Bond yields are still at incredibly low levels, which means the yield premium on equities could still push the market further. However, this is also a problem, as it means many asset classes are moving in tandem. As bond markets move up, so do the property stocks and mainstream equities. A problem occurs when bond yields peak out, as mainstream markets and property stocks will do too. As such, correlation risk has become acute.  With world growth slowing, and sterling rising...