Smaller companies represent a big opportunity for investors. They make up too much of the global investment universe to ignore, and these nimble and often niche companies are worth noticing.
abrdn, we have a history of identifying smaller companies with strong, sustainable business models that generate value for our clients. But, we also understand that continuous improvement is necessary to sustain success. So, we apply futurist thinking and ESG considerations to our insights and investment process in an effort to continue helping our clients reach their small-cap investment goals.
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Return potential
Many investors look at small caps and think higher risk. But the tradeoff for assuming more risk can be greater return potential over time as these small companies grow.
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Expanded diversification
Small-cap equities make a nice complement to their larger peers. The small cap asset class1 has a different sector makeup and provides greater exposure to the domestic economy and comprise a bigger investment universe compared to large caps.2
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Value opportunity
Because fewer analysts cover small-cap equities, there’s greater opportunity for investors to find undervalued, overlooked companies.
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1 As represented by the Russell 2000 Index, an unmanaged index considered representative of small‐cap stocks. The Russell 2000 Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.
2 As represented by the S&P 500 Index, an unmanaged index considered representative of the US stock market.
