Why small cap inflows could be on the rise

ON UK GROWTH

A trend for net withdrawals of assets from small caps could be on the cusp of a turnaround, explains Hargreave Hale AIM VCT manager Oliver Bedford.

Investors have made net withdrawals of capital from listed UK small caps in every year bar one from 1996-2012, according to statistics from the IMA. This sustained move away from the sector, which was principally led by pension funds and other institutional investors, contradicts a well-established and widely recognised trend of outperformance by small cap funds over the long term. Although the AIM index is not privy to the same sort of analysis, the trend of the last five years will, if anything, be more pronounced. However, this now appears to be changing in the wake of legislation ...