Our search for the best small stocks starts with the universe of all U.S. stocks (
the Canadian small cap market is too small to do this same approach).
Not exact matches
Take 2008: BRIC equities from the major emerging
markets led the decline, falling 49 %, while
Canadian small caps, down 46 %, represented a close second worst.
This new solution invests primarily in equity securities of U.S.
small -
cap companies that offer exposure to niche areas of the
market, aiming to provide high growth potential and diversification benefits for
Canadian investors.
The big winners were emerging
markets (up 22.7 %) followed by
Canadian REITs, US
small -
cap,
Canadian large -
cap, EAFE equities, US large -
cap, US mid-
cap and
Canadian small -
cap.
While few large -
cap Canadian equity funds outperformed the
market in the Morningstar study cited earlier, the vast majority of active
Canadian small -
cap funds — some 93 % — outperformed their benchmarks.
These
Canadian small -
cap stocks usually have
market caps under $ 250 million, and often trade for less than a dollar.
Now, contrast with 2008: U.S. equities lost 17 % (
small caps) and 21 % (large
caps), global equities lost 25 %, global
small caps lost 28 %,
Canadian equities lost 31 % (large
caps) and 46.6 % (
small caps), European equities lost 32.5 %, emerging
markets equities lost 41.4 %, and BRIC equities lost a whopping 49 %.
First, the
Canadian small -
cap market is dominated by energy and mining companies, which tend to be highly volatile.
The big winners were emerging
markets (up 22.7 %) followed by
Canadian REITs, US
small -
cap,
Canadian large -
cap, EAFE equities, US large -
cap, US mid-
cap and
Canadian small -
cap.
Funds in the
Canadian Small / Mid Cap Equity category must invest at least 90 % of their equity holdings in securities domiciled in Canada, and their average market capitalization must be lower than the Canadian small / mid cap thres
Small / Mid
Cap Equity category must invest at least 90 % of their equity holdings in securities domiciled in Canada, and their average market capitalization must be lower than the Canadian small / mid cap thresho
Cap Equity category must invest at least 90 % of their equity holdings in securities domiciled in Canada, and their average
market capitalization must be lower than the
Canadian small / mid cap thres
small / mid
cap thresho
cap threshold.
Funds in the
Canadian Equity category must invest at least 90 % of their equity holdings in securities domiciled in Canada, and their average
market capitalization must be greater than the
Canadian small / mid
cap threshold.
Funds in the
Canadian Focused Equity category must invest at least 50 % and less than 90 % of their equity holdings in securities domiciled in Canada, and their average
market capitalization must be greater than the
Canadian small / mid
cap threshold.
The
Canadian small -
cap market has relatively few names and is dominated by energy and mining companies, which can be highly speculative.
«You get to understand why they are cheap or lower quality when you go through a bear
market,» the portfolio manager of the IA Clarington
Canadian Small Cap Fund said.
Vanguard FTSE Canada All
Cap Index ETF (VCN): The FTSE Canada All Cap Index tracks 255 large, mid and small - cap companies in the Canadian stock mark
Cap Index ETF (VCN): The FTSE Canada All
Cap Index tracks 255 large, mid and small - cap companies in the Canadian stock mark
Cap Index tracks 255 large, mid and
small -
cap companies in the Canadian stock mark
cap companies in the
Canadian stock
market.