UK small-cap managers fail to beat index over five years

A large proportion of funds in the IMA UK Smaller Companies sector have failed to produce alpha over the long term, amid a strong rally in small-cap stocks.

Data compiled for Investment Week shows the average small-cap fund has lagged the benchmark index by 20 percentage points over five years. The UK Smaller Companies peer group, which consists of 53 funds, returned an average of 207.3% over five years to 5 February, according to FE, versus a return of 226.7% from the FTSE Small Cap ex-ITs index. Investment Week first highlighted this underperformance in May last year, with data showing the vast majority of managers in the sector had failed to deliver significant alpha over the year to 31 March 2013. The sector returned just 18.4% ove...