How should managers view UK smaller companies against the current economic backdrop?

clock • 2 min read

Dan Nickols manager of the Old Mutual UK Smaller Companies fund, asks if UK smaller companies should realistically be trading at a discount to their large cap peers

As we approach the end of the first quarter, I have been surprised by the strength of the UK equity market. There have been plenty of things for investors to worry about - the slowing rate of growth in the US and China, the impasse in eastern Ukraine, a renewed risk of a break-up of the eurozone centred on Greece, and last, but not least, the forthcoming UK election.  Yet year-to-date, the FTSE 100 index has risen by 8%, the FTSE 250 is up 10%, and the Numis Smaller Companies index is around 7.5% higher. Why are investors in optimistic mode? As I see it, there are two key reasons. ...

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