Can UK Smaller Companies Get Back on Track?

Smaller companies are some of the most dynamic and high-growth of all UK stocks, but are currently out of favour with investors - along with the rest of the domestic market

James Gard 28 October, 2020 | 1:36PM

Russian dolls, large to small

UK equities have been buffeted by the coronavirus crisis and Brexit this year, with fund flows suggesting that investors are shunning domestic funds in favour of bonds and other regions such as the US and Japan.

Dividend cuts have harmed the prospects of the large-caps – the FTSE 100 is off nearly 20% this year – but there has been no hiding place for faster-growing smaller companies either, with the Morningstar UK Small Cap index down more than 17%. Indeed, sentiment towards UK small-caps is so poor that the launch of the Buffettology Smaller Companies investment trust, which had been slated for this month, has been scrapped after it failed to attract enough money. 

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About Author

James Gard  is content editor for Morningstar.co.uk

 

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