Why invest in smaller companies?
Whether in Europe, the US and Japan, small-cap companies are traditionally reckoned to offer the potential for stronger growth than their large cap peers. They are often focused on a narrower set of markets and products and so can generally react faster than larger companies when it comes to seizing new opportunities.
And of course, small caps are often targets for acquisitions by large cap companies, particularly in periods when large caps have easy access to liquidity, as is the case now. This scope for M&A activity provides investors with further upside potential.
