Morningstar grants single "recommended" allocation following global small cap sector review
Morningstar has only granted a “recommended” allocation to a single global small cap investment fund manager, following its latest global small cap sector review.
Morningstar reviewed six different fund managers in the sector review, including Blackrock, Dimensional, Goldman Sachs, Lazard, Schroder, and Vanguard Investments. All fund managers received an “investment-grade” allocation, except for Schroders, which received the “recommended” allocation.
While there are sound benefits in investing in global smaller companies, short-term returns haven’t been as compelling for investors. The sector underperformed the large cap companies during the last financial year, thanks to greater “inherent volatility” of small cap investment, Morningstar said.
“This volatility remains one of the key issues to consider when contemplating investing in global small companies. Small companies are subject to risks which generally do not apply to established firms,” the report said.
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