by Jennifer Hill from interactive investor, 17th December 2024:
It is widely known that smaller companies are cheaper than larger ones, but given geopolitical tensions and economic uncertainty, many investors will want to hedge their bets.
With the help of a range of analysts and wealth managers, we take a tour of the regions to suggest large and small-cap pairings that could prove great double acts for portfolios.
Europe
European Opportunities & Montanaro European Smaller Companies
Matthew Read, a senior analyst QuotedData, rates European Opportunities Trust
– the most growth-focused in the Europe investment trust sector.
“It targets larger European companies but seeks out niche, resilient B2B businesses that should thrive across a range of economic conditions,” he says. “High inflation and interest rates have been a headwind, but improving sentiment as these subside should benefit the strategy and a 13% discount offers additional upside.”
Alongside that, he recommends Montanaro European Smaller, which focuses on high-quality, high growth small-cap companies. “It’s previously struggled due to its strong growth focus but is the best-performing European fund over one year – a 16% net asset value total return – and there should be more to come as growth recovers.”
Its holdings have “shown few signs of diminishing quality or revenue growth”, he adds, and a 13% discount “looks overdone”.
Read more here