Simon Evan-Cook: Introducing 'The Costanza Principle'

UK small-caps rule of thumb

clock • 8 min read

Is now a good time to invest in UK smaller companies? It is always a question worth asking, says Simon Evan-Cook, so here he outlines a rule of thumb he and his colleagues use to help them decide

Generally speaking, it is clearly a good idea for the long-term investor to hold a well-chosen portfolio of smaller companies. It just is. Figure 1 on the right, which goes as far back as our data does, shows UK smaller companies have trounced large caps over the last quarter of a century.  If you are anything like us though, you will see a chart like that and think, ‘crikey, that looks ripe for a fall'. Because, yes - 25 years is a long time, but not necessarily long enough. If you can get hold of the data from Professors Dimson and Marsh, who are the go-to experts in this field, howeve...

To continue reading this article...

Join Professional Adviser for free

  • Unlimited access to real-time news, industry insights and market intelligence
  • Stay ahead of the curve with spotlights on emerging trends and technologies
  • Receive breaking news stories straight to your inbox in the daily newsletters
  • Make smart business decisions with the latest developments in regulation, investing retirement and protection
  • Members-only access to the editor’s weekly Friday commentary
  • Be the first to hear about our events and awards programmes

Join

 

Already a Professional Adviser member?

Login

More on Investment

Advisers expecting more of asset managers since Consumer Duty

Advisers expecting more of asset managers since Consumer Duty

‘We actually need to understand one another better’

Hope Coumbe
clock 28 March 2024 • 1 min read
Fears tech limitations could stall MPS on its upward trajectory

Fears tech limitations could stall MPS on its upward trajectory

‘There have been a few changes and challenges around growth in general’

Hope Coumbe
clock 27 March 2024 • 1 min read
Partner Insight: Beyond 60/40

Partner Insight: Beyond 60/40

Invesco
clock 27 March 2024 • 5 min read