YOUR PORTFOLIO Small caps analysis that looks at the profitability and leverage of small caps . Using this approach , the portfolio aims to remove certain companies that do not exhibit sufficient quality characteristics .” Nevertheless , de Lisle says all active small-cap funds should beat the
Russell 2000 , due to the index ’ s loose listing requirements . “ The smaller the market cap , the better active management does against trackers ,” he adds . “ For example , trackers get hurt because small-cap indices include biotech , an underperforming asset class .”
Active small-cap outperformance vs index
Name
10yr returns (%)
% of active funds that underperformed index
IA North American Smaller Companies 270.7 16.7
Russell 2000 240.8 N / A
IA Japanese Smaller Companies 216.3 0
Russell / Nomura Small Cap 153.7 N / A
IA European Smaller Companies 161.6 31.3
MSCI Europe Small Cap 180.5 N / A
IA UK Smaller Companies 153.4 14.6
Numis Smaller Companies ( ex ITs ) 119.1 N / A
Source : FE Analytics
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