Blackrock has launched a global equity small cap exchange traded fund (ETF) as a response to increasing demand for the asset class.
The firms said its iShares MSCI World Small Cap Ucits ETF had a low level of idiosyncratic risk and would provide exposure to companies within real estate, industrials, and materials. It would also provide access to over 4,000 small sized companies from 23 developed market countries, accounting for 14% of the free float-adjusted market capitalisation across each country.
Commenting, iShares head of EMEA product, David Moroney said investors were increasingly diversifying their global equity allocation to include small cap stocks.
“Acceleration in economic growth will benefit small cap stocks, as these companies tend to add to employment quicker and contribute to growth faster,” he said.
“At the same time, through their domestic focus, smaller companies tend to benefit from domestic growth policies and will be less impacted by future changes in global trade arrangements.”
Moroney noted that global equities accounted for around $70trn in assets with almost 12% covered by the developed small cap sector.