Low correlation boosting appeal of small and micro caps, suggests MBH Corporation

A majority of professional investors in the UK (84%) believe micro and small caps are currently an attractive investment opportunity with most (74%) looking to increase their exposure over the next year.

Of these, 11% of respondents said they intended ‘significantly’ to increase their allocation with none planning to reduce their micro and small caps holdings said MBH Corporation, which carried out the survey.     

One of the main attractions of micro and small caps is that they have low correlations with large caps, those polled said.

 In the current market environment, 67% of UK based professional investors say this is an increasingly attractive feature with most expecting that low correlation to become more pronounced.

MBH () noted that the average growth of ten popular micro-cap indices in the 12-month period to 26th March 2021 was 91%. 

Callum Laing, MBH’s CEO, added: “Small and micro-cap indices have enjoyed very strong growth over the past 12 months, outpacing mid and large-cap indices.

“Smaller companies often benefit the most from hopes of an economic recovery and are the main winners when this starts. 

“This, and the fact they can also be more nimble than larger companies during difficult times and adapt better, helps explain why micro and small caps are currently so popular with investors.”

MBH, which surveyed 45 investors, currently has 26 small businesses in its portfolio.