WEALTHTRACK Why International Small & Midcap Stocks Deserve Investor Attention
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Sep 26, 2025 David Nadel, lead portfolio manager of the Invesco International Small Mid Company Fund, dives into the overlooked realm of international small- and mid-cap stocks. He reveals how these stocks offer superior profitability and stability compared to U.S. counterparts. Nadel explains why foreign SMIDs are of higher quality and discusses factors like home bias for U.S. investors. He shares examples of global leaders like Carl Zeiss Meditech and highlights sectors like healthcare and IT consulting, emphasizing the benefits of compounding and dividends as strategic investment tools.
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International SMIDs Offer Quality At A Discount
- International SMID stocks are higher quality and cheaper than U.S. SMIDs, offering better profitability and lower multiples.
- They provide stronger dividends, balance sheets, and potential for superior risk-adjusted returns.
Lower Correlation Improves Diversification
- International SMIDs show lower correlation with U.S. large caps because many businesses are local or niche global leaders.
- That lower correlation can improve diversification compared with international large-cap exposure.
Foreign Midcaps Must Be Global To Succeed
- Smaller market caps abroad must expand beyond tiny home markets, producing more sophisticated, resilient, and often global-leading firms.
- Achieving a mid-cap size in small countries signals higher operational toughness than the same size in the U.S.