European small caps have outperformed large caps in 14 of the last 21 years

MSCI Europe Small Cap vs Europe Large Cap

Source: Refinitiv Data Stream, Janus Henderson Investors Analysis, in Local currency, as at 30 December 2023

What is a smaller company?

Three reasons they have outperformed

Why the European Smaller Company Trust PLC (ESCT)?

 

Glossary

Dividend –
A variable discretionary payment made by a company to its shareholders.

Initial Public Offering (IPO) –
The process of issuing shares in a private company to the public for the first time.

Investment trust –
An investment trust is a form of investment fund, specifically a publicly traded collective investment scheme that invests its shareholders’ money in the shares of other companies.

Market capitalisation (market cap) –
The total market value of a company’s issued shares. It is calculated by multiplying the number of shares in issue by the current price of the shares. The figure is used to determine a company’s size and is often abbreviated to ‘market cap’.

Portfolio –
A grouping of financial assets such as equities, bonds, commodities, properties or cash. Also often called a ‘fund’.

Small caps –
Companies with a valuation (market capitalisation) within a certain scale, eg. $300 million to $2 billion in the US, although these measures are generally an estimate. Small cap stocks tend to offer the potential for faster growth than their larger peers, but with greater volatility.

Valuation metrics –
Metrics used to gauge a company’s performance, financial health and expectations for future earnings, eg. price to earnings (P/E) ratio and return on equity (ROE).

 

Disclaimer

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