Small Cap EN


The smallest combination can be the strongest

Small Caps

Spice up your investments

In our opinion, Small and medium sized companies are a rewarding asset class in which to hold a strategic position, whatever the geographic area and regardless of market timing:

  • They generally* offer stronger growth prospects than large caps as they are generally focused on fewer markets and products, are more flexible than large caps and they tend to grow faster.
  • Small caps are often targeted by large caps growing by acquisition. This recurrent M&A activity provides further upside potential for these stocks. They generally provide strong alpha. This is largely due to a much lower coverage by investment professionals compared with large caps – so stock selection can contribute more than sector allocation.
  • They provide diversification for an equity portfolio because their risk/return profile is different to large caps.
  • Small and midcap companies have common risk factors which generate higher volatility than large caps, particularly increased vulnerability to specific events (due to their smaller size and reduced business diversification) and lower liquidity. Therefore, it is important to build any small and midcap exposure within a well-diversified portfolio.

All these features make up the DNA of small and midcap stocks.

*Average annualised Earnings Per Share (EPS) of small and large cap companies on stock market indices over 2 years (2016-2017)
Small Caps** Large Caps***
Europe 12.81% 7.87%
USA 10.56% 10.31%
Japan 15.47% 10.85%

** reference indices by geographic region = MSCI Europe Small Cap, Russell 2000 et Russell/Nomura Small Cap Japan.

***reference indices by geographic region = MSCI Europe Large Cap, MSCI USA et Topix.

Source: IBES consensus data base as of 31 March 2016

  • How BNP AM has the good expertise/ solutions to answer this specific challenge/ market context
  • BNP Paribas Asset Management (BNPP AM) has built a strong franchise in this areas with around EUR 7.5 billion invested in small and midcap stocks (1) and managed by dedicated teams.
  • BNPP AM ranks among the top 3 players in Europe1

    We offer extensive coverage, with a top positioning in the major markets (Pan-Europe, eurozone, USA and Japan) and complimentary expertise in niche markets (Nordic countries, convertibles, micro-caps, the environment). Our teams are on-the-ground in each region providing us with the necessary close proximity to company management.

    Our funds offer superior ratings and long track-records (11 funds with track-records longer than 5 years)2

    1. Source : Broadridge as of end September 2015 / open-ended funds registered for sale in Europe, excluding the UK 2. Source : BNPP AM as of end September 2015 / comprises funds and mandates