Geffen: Small Stock Rally is Over

Investing in small and mid-sized companies has been a "free lunch" for UK equity investors over the past few years, says Neptune's Robin Geffen - and the ride is over

Emma Wall 1 December, 2016 | 9:17AM
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Investors who have relied on small and mid-sized company shares to boost their portfolio returns over the past seven years have enjoyed a "free lunch" according to Neptune founder Robin Geffen – but the meal is very much over.

Since 2009, 116 of the 121 small and mid-cap funds have outperformed the FTSE 100. Broader UK equity income fund managers chased these profits – allocating ever increasing amounts of their portfolios into small and mid-caps over the past five years, now at 40%. As the market has risen, investors have profited, but Geffen warns that this indiscriminate allocation will no longer work. Instead only those fund managers with exceptional stock-picking abilities will prosper.

"I want to let off a firework to warn investors," Geffen said yesterday, speaking at a conference in London. "There is a changing of the guard. The assets that have worked for your portfolios over the last few years will no longer deliver. We are living in extraordinary times."

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Apple Inc124.97 USD0.00Rating
Liontrust Income A Acc GBP3.97 GBP-1.45Rating
Microsoft Corp243.03 USD0.00Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar

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