Small (cap) is beautiful

SMALLER COMPANIES

Investors are returning to European equities and the small-cap sector has emerged as a winner, although earnings growth has so far been ‘the missing link'. Annabelle Williams looks at how managers are positioned against the sector.

Investor sentiment towards European equities has changed markedly over the last 18 months. Throughout 2011, Europe was widely considered a market beset with problems from debt-ridden governments, failing economies, the constraints of a single currency and politicians’ lack of gumption to solve the troubles. But now, the region’s stock markets are trading at a multi-year high. This is partly thanks to a speech given by European Central Bank president Mario Draghi in July 2012, which was widely credited with changing market sentiment towards the eurozone. Large vs small Since then, it...