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Money For the Rest of Us
Is Small Cap Dead? Why You Shouldn't Abandon Small Cap Stocks
Apr 24, 2024
Explore the underperformance of global small-cap stocks compared to large-cap stocks, reasons behind it, and the potential for double-digit returns. Discuss the importance of quality when investing in small caps and the benefits of considering small caps in a diversified portfolio.
25:53
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Quick takeaways
- Global small caps have outperformed large caps over the past two decades, with potential double-digit returns ahead.
- US small cap stocks have underperformed due to declining quality and coverage, offering opportunities for accurate stock picking.
Deep dives
The Historical Performance of Small Cap Stocks Globally
Over the past 20 years, global small cap stocks have outperformed global stocks, with small cap stocks in world XUS outperforming large cap by about 0.7% annualized. Additionally, emerging markets small cap stocks have shown significant outperformance compared to overall emerging markets, with US small cap stocks returning 8.8% annualized over the past two decades.
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Discover
highlights
Listen to the best highlights from the podcasts you love and dive into the full episode