European smaller companies – worth holding?

londoninvestor

One example: MSCI World Small Cap Index

or a regional one: MSCI Europe Small Cap Index

aroominyork

londoninvestor wrote: »

One example: MSCI World Small Cap Index

or a regional one: MSCI Europe Small Cap Index

Small cap? The Europe index has six British companies of which five are in the FTSE100.

masonic

aroominyork wrote: »

Can you point me to a small cap index? I don’t think there is any such thing.

Have you ever heard of the FTSE 250 index or the FTSE AIM All-share index? Many countries divide their markets up between larger and smaller companies.

masonic

aroominyork wrote: »

Small cap? The Europe index has six British companies of which five are in the FTSE100.

That doesn't mean they are not small caps. The UK market is tiny by global standards.

londoninvestor

So those seem to define small cap as below about $10bn market cap - which indeed is a "generous" definition. (6 UK companies are indeed in the top 10 of the Euro index, though they collectively make up only 3% of it.)

There's also the MSCI Micro Cap indexes: World and Europe, which look to be sub-$1bn.

aroominyork

It's very American, isn't it? The whole of that cute little place called Europe is small cap, even their biggest companies.

londoninvestor

aroominyork wrote: »

It's very American, isn't it? The whole of that cute little place called Europe is small cap, even their biggest companies.

For the MSCI World Small Cap, which is 57% US:

Mean constituent market cap = $1.47bn
Median constituent market cap = $0.92bn

For the MSCI Europe Small Cap:

Mean constituent market cap = $1.40bn
Median constituent market cap = $0.95bn

So they don't really apply a different definition of "small cap" for Europe if that's what you're getting at.

aroominyork

masonic wrote: »

Have you ever heard of the FTSE 250 index or the FTSE AIM All-share index? Many countries divide their markets up between larger and smaller companies.

It's easy to compile of index of a defined number of companies.

masonic wrote: »

That doesn't mean they are not small caps. The UK market is tiny by global standards.

Do you really think - by almost any measure except the biggest US companies - the FTSE100 is small cap?

Linton

aroominyork wrote: »

What is the source of your 560% please?

Trustnet/tools/charting . The figure was the best I could estimate from the graph, the facility doesnt provide tabulated figures.

masonic

aroominyork wrote: »

It's easy to compile of index of a defined number of companies.

I agree. That's why I was surprised you doubted the existence of a small cap index - in your own words "Can you point me to a small cap index? I don't think there is any such thing."

Do you really think - by almost any measure except the biggest US companies - the FTSE100 is small cap?

The bottom end of the FTSE 100 is "small cap". At the top end, the FTSE100 includes companies valued over £100bn, but it also includes companies 100 times smaller. Even by its own standards it contains both large and small companies. That's why we need terms like micro and nano to describe the really small companies towards the bottom of the All-share and AIM indices.