The exitence of the size premium – the idea that smaller companies tend to outperform larger companies – is disputed, but still expected by some investors.
Small caps have not outperformed large caps for over a decade, with three possible explanations: the outperformance of tech, low interest rates and a weak dollar.
The argument for holding small caps in your portfolio hinges on whether this ‘perfect storm’ is likely to continue – and how best to navigate the cycle.
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