Towards the end of last week, Asset Allocator held a breakfast roundtable in our London headquarters (work is still progressing on the hollowed-out volcano lair).
It was on the subject of small cap investing in partnership with Dimensional and we always find it fascinating to hear first-hand from our readers on how they approach certain assets or sectors (on that note, we always welcome thoughts and comments on our coverage for good or ill, or indeed on any issue - which you can send us by replying to this email).
Small caps remain a relatively niche pastime for DFMs - in our funds database there are 20 UK small companies holdings compared to 118 UK growth holdings and 81 UK equity income holdings.
The event was held under the Chatham House rule but two of the big concerns expressed by the DFMs in the room, when they were asked about their hesitancy towards small caps, centred around the falling number size of the public market and the potential for smaller companies funds to gradually become mid and large cap funds as their holdings grow.
As one of the DFM managers in the room pointed out, the cost of listing has gone up which means companies are now waiting longer.
The manager asked: "When you look at the MSCI World, Apple is a bigger market than the UK. Why would anyone look further down the market chain?"
But someone else in the room countered by saying that plenty of companies would, eventually, float.
He said: "I am not worried about that. Even if they have to stay private for longer, they will have to go public at some point in time - even a fraction of them."
There was also a discussion about whether the current economic environment, with lower growth would be good for small caps or not. Some in the room expressed concern about a period of stagnation but others pointed out that during the economic turmoil of the 1970s, small caps performed well.
This debate may well be the hinge on which small cap allocations spin in the coming months or so.
If you are interested in attending one of our roundtables, please do let us know by replying to this email and we can add you to our list.