David Nadel, portfolio manager at Legg Mason affiliate, Royce & Associates, explains why the case for investing in global smaller companies is intact, despite recent market declines.
Recent declines in global smaller company markets, like their large-cap counterparts, have been substantial, but we believe the long-term case for small-cap investing remains intact. In Europe, for example, while the growth outlook is poor relative to developing markets, we have taken a two-pronged approach to buying smaller companies for some time: (1) targeting those with a strong track record in exports and a growing portion of revenues derived from emerging markets; (2) targeting those niches even within Europe where there is still attractive structural growth. To elaborate on the...
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