In a recent EIE survey, half of Sweden’s fund selectors said they have a preference for small caps within the emerging markets equity universe, while only 29% prefer large caps. The remaining 25% have no preference.
The Swedish exception
In all other 11 countries surveyed by Expert Investor Europe in May and June, large caps are the primary choice of most fund selectors. In Germany and France the EM large cap bias is most pronounced, with respectively 70% and 77% preferring smaller companies. Many western investors tend to shy away from emerging markets small caps as this sector is under-researched and is perceived to be risky, even for emerging markets standards.