Cyclical and overseas stocks deliver for UK small caps but managers divided on domestic names

Top-performing UK smaller companies managers consider whether time is right to rotate into domestic stocks after bumper 2011.

It has been a bumper year for the UK Smaller Companies sector, particularly for those managers exposed to cyclical areas and companies with strong overseas earnings. However, the dilemma for managers in the sector now is whether to shift their portfolio into more unloved domestic names given the compelling valuations on offer, or whether to stick with those companies that have served them well but now look more expensive. The past two years has seen significant outperformance for three main areas of the small-cap market: cyclical growth names such as the industrial engineering compani...