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Finns and Swedes’ small cap preference reaps rewards

Fund data

A significant majority of Finnish (71%) and Swedish (62%) fund selectors prefer small cap funds instead of their large cap counterparts, according to Last Word Research.

Moreover, Finnish and Swedish selectors – 58% and 38% respectively – expressed a preference towards growth funds, instead of value, compared to the other 13 European countries surveyed.

Every quarter Last Word conducts in-depth interviews with a broad cross section of fund selectors from across Europe.

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Source: Last Word Research

In the three years to 31 January 2018, European equity small/mid cap funds returned 7.91%, three times higher than the 2.21% returns generated by large cap funds, according to Morningstar data.

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Source: Morningstar

This graph illustrates the amount an investor would earn if they invested €1 over the three years to 28 February 2018.

When looking at small cap and large cap funds that were either growth or value funds, the combination that performed the best over the same period were small/mid cap growth funds (75%+ growth) at 13.06%.

The worst performing combination was European equity large cap value funds (50%+ value) at 1.61% over the three years to 31 January 2018.

The pan-European preference was even for both small cap and large cap funds at 36% each, and the remainder had no preference.

French and Belgian fund selectors expressed the greatest preference for large cap European equity funds over their European counterparts, with 58% and 57% respectively.

The Belgians also preferred value funds the most at 65% followed by the Spanish at 63%.

Jassmyn Goh

Jassmyn reported from Sydney to New York to Jakarta before joining Expert Investor. She was most recently Features Editor at Money Management and Super Review in Sydney.

Part of the Bonhill Group.