global small cap

eastmidsaver

hello.  in my last post i was asking about investing into a SIPP in an automation fund.  but reviewing responses i think i've changed my mind.
so now my next thoughts are to instead put money into a global small cap fund.   i am thinking an index tracker maybe.
as it's going into SIPP,  it will be in there for the long haul.
would be great to hear your thoughts on this sector.  of course nobody has a crystal ball,  but do small caps still carry good potential in the long term? 
thanks.

Prism

I use quite a lot of small cap funds although most of them tend to hold a fair percentage of mid caps too. I used to pick different regional ones but at the moment I have a global small/mid cap cap to go with a UK small/microcap fund.

Thrugelmir

In global terms small cap might not be that small in terms of market capitalisation. The smaller the market capitalisation is, the less suitable it is for passive index tracking funds to hold. Which is down to the available liquidity in particular stocks.  

Smaller companies have the potential to grow much quicker than larger companies. Though investing in same will bring greater risk and a higher level of volatility. As the sector swings in and out of fashion. 

csgohan4

index tracker  with satellites to suit your risk appetites is the vanilla approach. Personal preference, there is no 'the' best way to do it nor risk free way.

Although this approach is better than all in a S+P 500 company/tracker only

older_and_no_wiser

eastmidsaver said:

hello.  in my last post i was asking about investing into a SIPP in an automation fund.  but reviewing responses i think i've changed my mind.
so now my next thoughts are to instead put money into a global small cap fund.   i am thinking an index tracker maybe.
as it's going into SIPP,  it will be in there for the long haul.
would be great to hear your thoughts on this sector.  of course nobody has a crystal ball,  but do small caps still carry good potential in the long term? 
thanks.

Hi. Maybe take a look at this thread which I started? Also worth doing some research (Trustnet, YouTube) to get a feel for what's out there and how it may fit your strategy. There's probably no right or wrong answers apart from don't make any rush decisions on buying or selling. Let the fund(s) grow over time. I think time always wins over impulse actions or panic.

george4064

I hold ISHARES III PLC MSCI WORLD SMALL CAP UCITS USD(GBP) (WLDS). Which as Thrugelmir rightly points out, it’s technically a world mid cap fund rather than small cap.

If we very broadly split UK listed companies into FTSE 100 = large cap, FTSE 250 = mid cap and FTSE AIM = small cap, this global ‘small cap’ fund would align most closely with the FTSE 250 in terms of market cap and also to similar market cap to some of the holdings at the lower end of the FTSE 100.

eastmidsaver

thanks for all your comments.

Thrugelmir

george4064 said:

If we very broadly split UK listed companies into FTSE 100 = large cap, FTSE 250 = mid cap and FTSE AIM = small cap, this global ‘small cap’ fund would align most closely with the FTSE 250 in terms of market cap and also to similar market cap to some of the holdings at the lower end of the FTSE 100.

AIM isn't small cap per se. ASOS and Boohoo are both capitalised at over £4 billion. ASOS in market capitalisation terms is large enough to be included in the FTSE100. 

You've also missed the raft of small/micro companies listed on the main markets. As an example, I hold RBN , which has a market cap of just £25m. 

JohnWinder

Do you have a personal investment policy statement? Might you benefit from one, if not? Rhetorical questions only.

https://www.bogleheads.org/wiki/Investment_policy_statement