Investing In International Small Company Stocks
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Overview: Article talks about the effect come up with the investment made in international small company stock. It states that the smaller the stocks the higher the return so that the highest returns were from the very smallest stocks in the market. The smaller company effect thus became one of the most widely researched effects in financial markets. International small company stocks provide a means of effectively diversifying away from domestic markets. The long-term evidence, as in the U.S., points to smaller companies having higher returns compared to large companies. However, the evidence is that managers of small company funds have a hard time outperforming small company benchmarks. The reason is probably that the costs of trading small company stocks can be very high. It suggests that the most effective way to capture the asset class is through passive strategies.
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Format: PDF | Size: 38KB | Date: Jan 2003 | Pages: 6
