Resolution Asset Management small cap manager David Clark is calling investors back to the currently unfashionable and volatile sector, saying today's market valuations will be retrospectively viewed as a great buying opportunity.
Clark, the £100m RAM UK smaller companies fund manager, believes small caps will outperform the wider market over the next three years.
While Clark admits it is hard to make short term predictions, he says the volatile conditions have thrown up some interesting opportunities, with some stocks seeing share price movements of up to 30% in a day.
Clark remains underweight in the general retail and building sectors, while maintaining faith with the majority of stocks in his portfolio.
“The market is fraught with difficulty and companies are being crucified for any bad news,” he says.
“Hedge funds have been very quick to short on the back of the most minor wobble and that has made investing all the more difficult.
“But over the long term prices will recover to accurately reflect past and future growth prospects and I expect small caps to outperform the wider market over the next three years.”IFAonline
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