As investor confidence returns to the market, smaller companies have historically outperformed larger by 5%-8%, compared to an average relative underperformance of 4.2% in the initial stages of an economic downturn
The prospects for UK smaller companies look excellent, with a combination of strong earnings forecasts, low valuations and the increased appetite for growth companies as economies move out of the current downturn, allowing them to outperform their larger counterparts. This was the case in the fourth quarter of 2001 as investors showed a willingness to look through weak corporate news and focus on the prospects for stronger growth in late 2002 and early 2003, and we expect it to continue as investor confidence returns to the market. History shows that although UK smaller companies tend...
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