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Small stocks could help you sail through

Small stocks could help you sail through the increasingly choppy waters of investments opportunities

By ROSIE MURRAY-WEST, FINANCIAL MAIL ON SUNDAY
PUBLISHED: 22:00, 15 August 2020 | UPDATED: 12:41, 16 August 2020

Some say small is beautiful, but if you have ever been on a yacht in a big storm, you will know it can be stomach-churning as well.

That is why some investors avoid buying smaller company investment funds – more volatile investments than those invested in FTSE All-Share Index stocks. But others actively court them, liking the potential for picking winners in sectors such as healthcare and technology…

Being small in a Covid world 

Despite long-term outperformance, UK smaller and medium sized companies have lagged behind their larger cousins since the beginning of this year…

Firms with the power to act fast 

One of the main reasons why some managers like smaller companies is their ability to act fast and take advantage of business opportunities, which can be more difficult for bigger companies…

How investment funds have fared 

Investment trust analysts at QuotedData have crunched the performance numbers for smaller company investment trusts over the past six months. Those with a strong bias towards healthcare stocks have performed the best, benefiting from renewed interest in healthcare due to Covid.

Oryx International Growth leads the way. Over the past six months, its share price has increased 4 per cent – 19 per cent in the past three months. Key investments include EKF Diagnostics, which is contributing towards Covid testing, and Ergomed which has been assisting in trials of therapies for Covid.

James Carthew of QuotedData also singles out BlackRock Throgmorton. He says: ‘In addition to a good track record of picking winning stocks, manager Dan Whitestone can also short shares in companies that he thinks face insurmountable challenges. Both parts of this investment formula have done relatively well.’

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