How to build your small-cap stock portfolio

David Thornton outlines his simple rules for how private small-cap investors can manage their portfolio.

How many shares do you need to have a sound portfolio? I'll let you in on a secret – it's fewer than you might think.

If you took a portfolio of ten small-cap stocks to a professional financial advisor or fund manager he would tell you that it's too small that you're taking on too much risk. But the reality is that a portfolio of ten shares will stand you in perfectly good stead. Adding a lot more shares than that won't make any difference to your risk.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free
https://cdn.mos.cms.futurecdn.net/flexiimages/mw70aro6gl1676370748.jpg

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up
Swipe to scroll horizontally
Small-cap stock portfolio size: £5,000
Annual turnoverNumber of shareholdings
51015
20%£29 (0.6%)£53 (1.1%)£77 (1.5%)
50%£72.50 (1.4%)£132.50 (2.6%)£192.50 (3.8%)
Swipe to scroll horizontally
Small-cap stock portfolio size: £25,000
Annual turnoverNumber of shareholdings
51015
20%£73 (0.3%)£97(0.4%)£121 (0.5%)
50%£182.50 (0.7%)£242.50 (1.0%)£302.50 (1.2%)
100%£365(1.5%)£485 (1.9%)£605 (2.4%)
Swipe to scroll horizontally
Small-cap stock portfolio size: £100,000
Annual turnoverNumber of shareholdings
51015
20%£148 (0.1%)£196 (0.2%)£292 (0.3%)
50%£370 (0.4%)£490 (0.5%)£730 (0.7%)
100%£740 (0.7%)£980 (1.0%)£1,460 (1.5%)
Explore More

David Thornton is a small cap share expert with over 30 years’ experience in the investment world. He was an equity fund manager at Henderson Global Investors for 17 years, and in 2006 he launched the Matrix New Europe Fund, investing in equities throughout Eastern Europe, Russia and Turkey.