Thursday 1st February 2007
Smart money on the small-caps
UK small-cap companies have outperformed their large-cap rivals for the fourth year running, according to the 2007 Hoare Govett Smaller Companies (HGSC) Index.
Published by ABN AMRO and London Business School professors Elroy Dimson, professor of investment management, and Paul Marsh, emeritus professor of finance, the HGSC Index measures the performance of the lowest tenth by market capitalisation of the main UK equity market. The HGSC Index showed a return of 25.1 per cent in 2006, 8.4 per cent above the FTSE All-Share. Over the last four years, the HGSC's worst annual return was +20.3 per cent (in 2004) and its worst return relative to the All-Share was +6.6 per cent (in 2005). It means that small-cap investors have successfully recouped their losses from the 2000 - 2003 bear market. Since the bottom of the market in March 2003, an investment in the HGSC has now trebled in value. Over the last eight years, the HGSC has returned 172 per cent, beating the FTSE All-Share by 119 per cent.
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