Three quality small caps to snap up

Smaller companies have beaten their bigger rivals in the FTSE 100. Professional stock picker Ed Beal tips three to tuck away for the long run.

Each week, a professional investortells MoneyWeekwhere he'd put hismoney now.This week:Ed Beal,manager, DunedinSmaller CompaniesInvestment Trust.

Small companies have returned 10.4% (including dividends) in 2015 so far. That's attractive in any environment, but compares particularly well to the 2.8% from the FTSE 100. Why the divergence? Resources (mining, oil and gas) stocks, hit hard by falling commodity prices and slowing demand from emerging markets, are less important in the small-company universe than in the large-cap indices. Small companies also tend to be less exposed to emerging markets than their larger brethren.

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Ed Beal is the manager at the Dunedin Smaller Companies Investment Trust. Ed has contributed to MoneyWeek in the past, giving his outlook on share tips.