How to navigate the world of small-caps

SMALL-CAPS

Harry Nimmo, manager of the Standard Life Investments Global Smaller Companies fund, explains the key principles for investing in smaller companies.

Smaller capitalised, and often undervalued relative to their growth prospects, smaller company equities offer investors the potential for substantial returns that are more difficult to achieve from companies perceived to be fully grown. In the UK, smaller companies have outperformed their larger brethren by 3.4% per annum over the past 54 years. On a global scale, the recent numbers are even more pronounced with an 8.3% annual outperformance of large caps since 2000. Indeed, with almost 6,500 stocks to choose from, compared with 2,500 in the global large cap universe, the opportunity set fo...