Mercer | Small Caps within a Global Equity Portfolio

Wealth and Investments

Small but Not Irrelevant
Small Caps Within a Global Equity Portfolio

Remarkably, standing at the investment universe’s metaphorical cocktail bar, many investors have yet to indulge in one of its most delectable signature drinks. The full-bodied, well-integrated, and occasionally zesty blend of alpha and beta: small-capitalization equities, or “small caps.” 

Even from the relatively neutral starting point of modern portfolio theory, for all its flaws — which suggests that rational, mean-variance-optimizing investors must hold the market portfolio — small caps should represent a nontrivial component of an investor’s equity allocation. But the case for small caps extends well beyond modern portfolio theory.

Investors commonly neglect a segment of the investment universe with one of the most promising amalgamations of alpha and beta: small-capitalization equities (small caps). This is remarkable given the opportunity for excess returns and diversification presented by actively managed small-cap exposure.

  • Small caps offer compelling alpha opportunities, diversification, and potentially a return premium.
  • Many investors have negligible exposure to small caps.
  • Clients should consider a strategic allocation to active small-cap equity strategies.

Neglected or underappreciated by some, small-cap exposure can enhance an equity allocation’s risk/return profile, and should be a core building block within a diversified portfolio for many investors. 

Mercer has identified and maintains coverage of a wide range of highly rated single country, regional, and global small-cap strategies. We also cover a broad range of highly rated regional and global all-cap strategies that offer varying degrees of small-cap exposure. Mercer has extensive experience in incorporating small-cap exposures within a globally diversified equity portfolio. 

 Fill out your details below to receive the PDF

Thank you for your interest in Mercer's white paper Small but Not Irrelevant: Small Caps Within a Global Equity Portfolio. If you do not have your pop-up blocker enabled, you will be prompted by your browser to download the report or to view it in a new window. In addition, you will receive an email from Mercer shortly with a link to access the article.

Please enter your details below to receive the article.
*필수항목
필수항목입니다.
필수항목입니다.
필수항목입니다.
필수항목입니다. 올바르지 않은 메일주소입니다.
필수항목입니다.
필수항목입니다.

I would like to receive communications about products and offerings from Mercer. I understand that I can unsubscribe at any time. 

By clicking Submit, I agree to the use of my personal information according to the Mercer Privacy Statement. I understand that my personal information may be transferred for processing outside my country of residence, where standards of data protection may be different.

처리 중 오류가 있습니다. 입력하신 내용을 확인하시고 다시 제출해 주십시오..

Thank you for Submitting. We will get back to you shortly.