Why it may be time to revisit small-cap funds

Time to revisit small caps

UK small caps have been a great place to be for long-term investors, and their recent weak patch may have presented a buying opportunity. FE's Josh Ausden looks at the options available for those willing to take a fresh look at the sector using investment trusts.

Returns in excess of 20%, and outperformance versus the FTSE 100, in four of the five calendar years between 2009 and 2013 have resulted in very high expectations for UK small caps. 2014 was an unusually difficult year for the IA UK Smaller Companies sector, with significant profit-taking resulting in a steep sell-off in February. Still, the sector finished the year down just 1.7% - a mere 2.4 percentage points behind the FTSE - which can hardly be seen as a disaster. The decline in sentiment is most evident among investment trusts, with falling demand leading to widening discounts ac...