Small caps: Quality as a cornerstone
A look at how quality small-cap stocks may offer meaningful downside protection during market stress while delivering potentially compelling long-term returns.
Small cap equities
Unlock the power of small
Small cap companies represent a big opportunity for investors. They're a vital part of the global investment landscape, offering agile and niche businesses that can significantly enhance investors’ portfolios.
We’ve been investing in small cap companies for over 25 years, with extensive experience in identifying quality companies that possess strong, sustainable business models and generate value for our clients.
We don’t chase trends or try to time market moves. Instead, we believe a long-term mindset, combined with sustainable considerations are the best way to help our clients achieve their investment goals.
Why should investors look at smaller companies? Because smaller companies are too big to ignore and present a vast opportunity. (2:20 min watch)
Why Small Caps
Return potential
Small cap companies have generally outperformed their larger peers across all regions over the long term.1 While many investors think small caps are too risky, the trade-off for assuming more risk can be greater return potential. Many of these small cap companies grow into tomorrow’s leaders.
Enhanced diversification
Small cap companies make up around 70% of the world’s businesses.2 This gives investors access to dynamic firms across various sectors and fast-growing markets not found in the large-cap world. Small cap companies are also more exposed to domestic economies, which may provide a buffer against global market volatility and offer unique growth opportunities.
Value opportunity
Despite their obvious potential, many asset classes within small cap companies are trading at a discount in absolute terms to their larger peers. This may offer an attractive entry point.
We also believe that investing in small cap companies can offer significant value for investors over the long term. Our deep, fundamental research has the potential to take advantage of lower sell-side coverage.
1 Source: Morningstar Direct, 01/10/01-31/10/24. Annualized relative outperformance of MSCI Small Cap index vs broader MSCI index
2 Source: MSCI, March 2025
Presenting the Aberdeen small-cap products:
abrdn Focused U.S. Small Cap Active ETF
Ticker: AFSC
abrdn U.S. Small Cap Equity Fund
Ticker: GSXAX
abrdn International Small Cap Fund
Ticker: WVCCX