Chart of the week: tiddlers race ahead of the giants

Few investors seem to have noticed that Britain's small cap index has left the FTSE 100 behind.

670-COTW-634

When things look bleak, "it's the small things that keep us going", says Ian Cowie in The Times. Few investors have noticed that the FTSE Small Cap index is still up by more than 10% on the year, while the FTSE 100 is down. Over the past three years the tiddlers have left the blue-chips standing.

Small companies, unlike the giants, make most of their sales in the UK. With world growth lacklustre, China jitters centre stage and the domestic economy gathering pace in the past three years, the minnows have been swimming with the tide. It's alsoeasier to grow sales and profits rapidly from a low base thanproduce eye-catching increases when a company is already huge.

The downside, however, is that the tiddlers' stocks tend to fall further in a downturn than blue-chips, where weakness in one area can be offset by resilience in another. They also tend to have fewer financial reserves to ride out tough times.

Recommended

The British equity market is shrinking
Stockmarkets

The British equity market is shrinking

British startups are abandoning public stockmarkets and turning to deep-pocketed Silicon Valley venture capitalists for their investment needs.
8 Nov 2019
Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
Why China appeals to good investors
China stockmarkets

Why China appeals to good investors

China is one of the few places left to good investors hoping to make a decent return, says Merryn Somerset Webb.
14 Sep 2020
Mega-cap tech stocks: a very crowded trade
Tech stocks

Mega-cap tech stocks: a very crowded trade

It’s a dangerous time for markets when investors can no longer afford to go against the consensus
14 Sep 2020

Most Popular

Here’s why you really should own at least some bitcoin
Bitcoin

Here’s why you really should own at least some bitcoin

While bitcoin is having a quiet year – at least in relative terms – its potential to become the default cash system for the internet is undiminished, …
16 Sep 2020
Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
Central banks want politicians to take charge – but what will they do?
US Economy

Central banks want politicians to take charge – but what will they do?

The US Federal Reserve has come to the end of the road in terms of what it can do to accelerate any recovery, says John Stepek. It's over to the polit…
17 Sep 2020