Mike Prentis, portfolio manager of BlackRock's Smaller Companies investment trust, reacts to claims small caps are precarious due to their reliance on the UK economy.
So often we hear the suggestion to stay away from UK small caps, as they are deemed to be too risky and exposed to the UK economy; instead investors are encouraged to own ‘high quality’ large-cap companies. There are several problems with this suggestion. Firstly, UK small caps are by no means always risky, especially when held as part of a portfolio. Secondly, many UK small caps are international in outlook with high levels of sales to overseas markets, including high growth emerging markets. Thirdly, the performance of some UK large-cap companies has been disappointing over the last de...
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