When it comes to stocks, it makes sense to buy small

Each week, a professional investor tells MoneyWeek where he’d put his money now. This week: Ed Beal, manager, Dunedin Smaller Companies Investment Trust.

Small companies have had another excellent year. During 2013 the FTSE Small Company (excluding investment trusts) index delivered a total return (in other words, including dividends) of 44.3%, compared with the 14.4% returned by the FTSE 100.

To understand why small companies as a group did so well, we need to reconsider some established investment wisdom, which dictates that small companies are inherently more risky than their larger rivals. The reality is [...]

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