This year, small caps delivered one of their strongest first-half total returns in years, and the case for the category appears to be strengthening. Small caps combine a long track record of historic outperformance relative to large caps¹, with improving earnings sentiment and attractive relative valuations.
Drawing on proprietary analysis, market data and two decades of historical evidence, our latest research explores whether the next opportunities could lie beyond the hyperscalers. From capital expenditure and earnings expectations to valuations and market concentration, we examine the case for small caps today.
Inside this whitepaper:
• The AI investment cycle beyond the hyperscalers
• How the small-cap universe has evolved
• The capital expenditure opportunity
• Valuations and earnings trends
• Market concentration and diversification benefits
References
1. Outperformance is calculated as the five-year rolling average on a monthly basis of small caps vs. large caps.
Disclaimer
Van Lanschot Kempen Investment Management NV (VLK Investment Management) is a specialist Asset Management company – a strong player in its niche markets. We focus on a select group of strategies that place us among the top of our international league in Small-caps, Real Estate, Dividend Equities, Fixed Income and Hedge Fund Solutions. We are passionately committed to building long-term partnerships based on transparency and trust and we consider our clients’ goals as our goals, which is why VLK Investment Management and our employees invest in our funds right along with you.
Small-caps: general risks to take into account when investing in small-cap strategies
Please note that all investments are subject to market fluctuations. Investing in a small-cap strategy may be subject to country risk, equity market risks and small cap company risk, which could negatively affect the performance. Under unusual market conditions the specific risks can increase significantly. Potential Investors should be aware that changes in the actual and perceived fundamentals of a company may result in changes for the market value of the shares of such company. Equities of companies with small capitalization can be more volatile than equities of mid and large companies and may also be less liquid.
The value of your investment may fluctuate, past performance is no guarantee for the future. Do not take unnecessary risks. Before you invest, it is important that you are aware of and are informed about the characteristics and risks of investing. This information can be found in the available documents of the strategy and/or in the agreements that are part of the service you choose or have chosen.
Profile of the typical investor in small-cap strategies
The strategy may be suitable as a core or supplemental investment for those:
- interested in a convenient way of gaining exposure to small-cap companies and to (international) equity markets;
- seeking long-term growth of their investment (5 years or longer);
- who can bear the possibility of significant losses, especially in the short term; and
- who have experience with the risks and rewards of equity investing
