The micro-stock home bias

The micro-stock home bias

Valuations in UK small caps have fallen back after a strong run. But could they bounce back in line with the strengthening UK economy? Giles Hargreave, co-manager of the Marlborough UK Micro-Cap Growth fund and co-manager of the Marlborough Special Situations fund, argues the case.

The UK today is no longer the ‘sick man of Europe', and the forecasts are that we are emerging from the financial crisis with stronger economic growth than many other developed nations. The Bank of England recently upgraded its GDP growth forecasts to 3.5% for 2014 and 3% for 2015, while the International Monetary Fund is predicting the UK will be the fastest growing G7 economy this year, outpacing the US and Germany. There are still plenty of factors that could upset the apple cart: no-one should forget the scale of the deficit and the prospect of fresh political upheaval as we begin...