Fleeing investors cause problems for small caps

Capital flight to blue chips will continue to hamper small and mid-cap performance in the short to medium term. Large caps have been outperforming small caps over the calendar year to date, as risk averse investors flee to more liquid stocks. The prevailing negative market sentiment and lack of visibility of earnings will lead to continued underperformance from the asset class, says Alex Ross, UK small-cap fund manager at Aberdeen Asset Management. He says: 'We are expecting continued underperformance from small caps in the short term, largely due to the lack of liquidity and quali...