Small capitalized stocks tend to be ignored in favour of investing in large capitalized stocks. Dave MacLennan who is Investment Director of Equities from the multi-billion fund management firm – Aberdeen Standard Investments says it does not pay to sniff at small caps as there are big gains to be had.
“We would suggest that investors have a balanced equity portfolio, and for long-term strategic allocation to smaller companies because of the attractive return the hold” established Dale MacLennan.
MacLennan is the Investment Director of Equities from Aberdeen Standard Investments. The firm is the newly merged entity of Aberdeen Investments and Standard Investments. He is in Kuala Lumpur to speak to various fund managers, media, and other stakeholders on the case of having a balanced portfolio in equities by investors.
Performance of small-caps last year were lagging the broader market. Russell 2000 is +13% YTD, which underperformed the Dow (25%) and S&P 500 (20%). Why then would MacLennan be optimistic about small caps?
“The investment case for small-caps in 2018 is indeed compelling. Price based on past earnings, and price on expected growth for small companies always tend to be skewed if you just take a narrow point of view” retorted MacLennan.
Investors should instead take a longer time frame, to understand the macro-economic condition of the market they operate in, and to take in all the various scenarios that puts that company in total investment view
When asked about the merger of Aberdeen and Standard Investments changed how the firm invests, MacLennan says that the merger is a complex one and a lot has to be done. But why it is working is because we are both active investors.
"We take long term consideration approach. And our research is driven by fundamentals and meeting the companies that we invest and understand better their businesses” says MacLennan.
“With Aberdeen, we are known in Asia amongst fund managers and institutional investors. With Standard Investments, we are comfortable with long term investments. These qualities have resulted in the two firms having a ‘commonality’ in achieving investment optimization” reminded MacLennan.
Podcast of the interview:
