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“ Rising interest rates saw increased volatility and dispersion of performance within markets more broadly , and the small-cap cohort of managers more specifically ”
Alena Kosava Head of investment research at AJ Bell
Europe Small Cap index has made 180.5 % over the past decade , well ahead of the 161.6 % made by the IA European Smaller Companies sector . But of the 16 active funds in the peer group with a track record of longer than 10 years , just five – or 31.3 % – underperformed the MSCI Europe Small Cap index .
There is a technical reason for the sector ’ s underperformance – our data takes survivorship bias into account . Looking at those 16 surviving active IA European Smaller Companies funds , the average 10-year return is 198.2 %, 36.6 percentage points higher than when the returns of closed or merged funds are included .
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