But
the benefits of small cap stocks don't end with just diversification.
Not exact matches
O'Shaughnessy says the bulk
of the
benefits for
small -
cap stock investors come from buying the tiniest
of the tiny.
Although these
stocks have a somewhat lower likelihood
of becoming a large -
cap stock than
small growth in a given year, they can also
benefit greatly by moving into a neutral or growth portfolio or by becoming the target
of an acquisition.
Meridian
Small Cap Growth (MSAGX)
Small growth
stocks have been described as «a failed asset class» because
of the inability
of most professional investors to control the sector's downside well enough to
benefit from its upside.
International
small cap active managers that target companies with positive earnings may
benefit from the historical outperformance
of these
stocks
Investors choosing a relatively conservative approach
of targeting large -
cap stocks achieved very comparable
benefits to more aggressive investors who followed momentum and
small -
cap strategies.
Most importantly, that the manager's
stock selection ability, if not positive, was at least not so negative that it overcame the putative
benefits of being in
small -
cap growth in the first place.