Strong potential for further growth

The UK equity market delivered a positive return for the second year running, albeit a more modest performance than in 2003. Smaller companies outperformed large caps again. The question now is whether small caps can deliver for a third year. A close examination of the drivers of the small caps market's strength should shed some light not only on the reasons behind its outperformance but also highlight the potential for them to generate a positive return again 2005. Perhaps the simplest explanation for the sector's strength is that smaller companies are naturally more attuned to the dom...