European smaller companies – worth holding?

masonic

aroominyork wrote: »

When you invest in a small cap fund do you really, intuitively, think you are investing in the FTSE100?

You know that's a complete misrepresentation of what I wrote. The FTSE100 contains larger and smaller companies. It is heavily weighted towards the larger companies, but a number of smaller companies are included within the index with a very low weighting. If you don't understand how an index is composed, then I don't think any further discussion will be productive.

"There are basically three sizes of listed companies: large caps, mid caps, and small caps (cap is shorthand for market capitalisation). Broadly, large cap means the FTSE 100, mid cap means the FTSE 250 and AIM 50, and small cap means anything smaller than these." http://www.whatinvestment.co.uk/choosing-between-large-mid-and-small-caps-2118443/

Broadly does not mean "exclusively". As above, FTSE100 is heavily weighted towards larger companies but does not just contain large caps. I disagree with this article's definition of small cap and so did you when you quoted the investopedia one. The FTSE250 contains plenty of small caps - they are held in various small cap funds, so I think I am in good company in taking that view.

Anyway, I'm bowing out of this discussion. There's none so blind as those who won't see.

aroominyork

masonic wrote: »

You know that's a complete misrepresentation of what I wrote. The FTSE100 contains larger and smaller companies. It is heavily weighted towards the larger companies, but a number of smaller companies are included within the index with a very low weighting. If you don't understand how an index is composed, then I don't think any further discussion will be productive.


Broadly does not mean "exclusively". As above, FTSE100 is heavily weighted towards larger companies but does not just contain large caps. I disagree with this article's definition of small cap and so did you when you quoted the investopedia one. The FTSE250 contains plenty of small caps - they are held in various small cap funds, so I think I am in good company in taking that view.

Anyway, I'm bowing out of this discussion. There's none so blind as those who won't see.

Of course I know there is a range of market caps within the FTSE100 but I maintain none are small caps. I am also happy to leave it there.

bostonerimus

There has been research by very clever people that shows overweighting of small caps can produce gains over and above the added risk to the portfolio. This is all US based and whether you feel capable of implementing a complex portfolio management scheme developed by Nobel Prize winners is your call.