Tech bubble burst is taking its toll

managers have seen three consecutive years of diminishing returns on uk smaller companies funds, influenced by the weak technology sector

The UK smaller companies sector has seen a considerable erosion of returns over the past three consecutive years. The average return on funds was 82% on an offer to bid basis in 1999, compared with a 0.6% return in 2000 and an 18.95% drop in 2001. Much of the stellar performance in 1999 was due to strength in technology firms, many of which are relatively small, providing adventurous portfolios with a strong growth kicker. This growth strength in the smaller companies sector did not last through 2001, but those that stayed overweight in the sector for the first quarter saw it drive...