European small caps look promising

Growth prospects for European smaller companies still remain good despite their rising valuations. Both merger and acquisition activity and the low interest rate environment are set to give them a further boost. According to Aidan Farrell, manager of the European Smaller Companies fund at Insight Investments, in 2004 European small caps have performed well against large caps. So much so that their valuations have moved closer to larger companies. Smaller companies are no longer trading at big discounts to large caps. Philip Dicken, deputy fund manager of the Threadneedle European Small...