With UK interest rates yet to peak and the possibility of a recession looming on the horizon, the mere notion of economic recovery still feels far away. But when it does come, there is evidence to indicate small-cap equities might outshine their larger counterparts. With a global remit and balanced approach, the Global Smaller Companies Trust (GSCT) can help investors position themselves for this eventuality, while avoiding the riskiest corner of the market.
- Global and diversified fund
- Balance between growth and value
- Growing dividend
- Small caps' post-recession record
- Economic backdrop
- Could underperform in a growth rally
For the patient investor, the case for small caps looks attractive. Historically, US small caps have tended to outperform large caps in the year after a recession, according to analysis by index provider MSCI. On a 10-year investment horizon, developed small caps outperformed developed large caps 81 per cent of the time. The figure was 80 per cent for emerging markets and rose to 90 per cent over 15 years.