Small is beautiful once more in the investment world

In these unsettled times, there is supposed to be a flight to quality, with the understanding that only big, stable companies offer it. But this time round, investors are distinctly ambivalent about things that are big or global. Many are realising that testosterone-driven M&A activity, the glory of the 1990s, rarely adds value and often destroys it. They are downsizing, in all respects. Once again, small is beautiful. Portfolios too are beginning to reflect the attraction of small caps. Small firms still have an image of homespun solidity. Often locked into the national economy, they are...