Talking Point  

Smaller companies are offering opportunities

  • Describe some of the advantages of investing in small cap stocks
  • Explain why there is more liquidity
  • Identify the reasons smaller companies can pay dividends
CPD
Approx.30min
Smaller companies are back in fashion
Small cap firms are benefiting from Covid-19
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Smaller companies often get neglected by investors, dazzled by the big names and big dividend payers, but during the pandemic, this should not necessarily be the case.

There is a good argument for taking a closer look at investing in smaller companies as many of these are in a much better position to move quickly and position themselves for a new future, without the legacy of a large business.

Many of them may not have the deep pockets of a larger company, but money is available - and cheap - and so this makes this recession unlike the Great Financial Crisis, in this respect.

Many smaller companies innovate and take a longer term view on the future, speculating on where society might go, and innovating accordingly. This makes small cap stocks more attractive for investors.

In this report, we look at some of the factors driving performance in smaller companies, and how investors should consider them when looking for investment opportunities.

CPD
Approx.30min

Please answer the six multiple choice questions below in order to bank your CPD. Multiple attempts are available until all questions are correctly answered.

  1. Smaller companies have bounced back strongly during the pandemic, true or false?

  2. Why is there more liquidity in the system?

  3. Why have traditional safe haven stocks such as oil fallen out of favour?

  4. For the past decade, it has been the performance of the Chinese economy which has influenced the global economy, true or false?

  5. Why is Richard Penny excited about UK tech stocks?

  6. Why are smaller companies able to pay dividends, sometimes better than larger companies?

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You have successfully answered all the questions correctly, well done!

You should now know…

  • Describe some of the advantages of investing in small cap stocks
  • Explain why there is more liquidity
  • Identify the reasons smaller companies can pay dividends

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