Invest
Are small caps on the cusp of something big?
Australian investors have avoided small cap equities over the past few years, but one company believes they’re about to enjoy their moment in the sun.
Are small caps on the cusp of something big?
Australian investors have avoided small cap equities over the past few years, but one company believes they’re about to enjoy their moment in the sun.
The largest 100 Australian listed companies have returned investors 11.74 per cent in the five years since 2012, leaving the S&P/ASC Small Ordinaries index in the shade (returning 4.17 per cent), according to Activus Investment Advisors.
Activus Investment Advisors co-founder Robert Talevski said the “outperformance gap” of 7.57 per cent was created by investors’ appetite for higher-yielding large cap stocks.
As a result of investors “piling into” large caps, small caps are now cheaper than large caps on a price to earnings basis, Mr Talevski said.
“Large caps with a price to earnings ratio 18.3 times are considered expensive relative to its long-term average and in comparison to small caps with a price to earnings ratio of 16.1,” he said.
“The estimated three-five year earnings per share growth rate of small caps (15.4 per cent) is well ahead of the large cap growth rate of 10.8 per cent.”
The strong earnings growth expectation for small caps along with their attractive price earnings measures are “supportive of performance for small caps going forward”, Mr Talevski said.
More generally, it makes sense to increase exposure to small caps on an asset allocation basis, he said. Small caps tend to offer considerable returns potential, diversification benefits, a stronger alignment between management and investors, and the ability to access new companies.
“"Being a long-term investor also helps allowing smaller companies to achieve their growth expectations over the long term without being affected by short-term fluctuations,” Mr Talevski said.
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
Granny flats become Aussie families' cost-effective solution to soaring living costs
As the cost of living skyrockets, a forward-thinking trend is sweeping across Australia – granny flats are becoming a favoured living arrangement for older Aussies seeking comfort and proximity to ...Read more
Property
Homebuyers grapple with extended savings period amid affordability crisis
Gone are the days when an Australian dream home seemed just within reach. The path to homeownership in Australia has extended by at least two arduous years, as revealed by the latest insights from ...Read more
Property
Hybrid development unlocks new potential for NDIS housing in metro hotspots
In a ground-breaking strategy aimed at addressing the stark imbalance between the location of Specialist Disability Accommodation (SDA) developments and the actual areas of demand, Aligned Disability ...Read more
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. Read more
Property
Retirement communities: a pivotal element in meeting Australia's housing targets
The Retirement Living Council (RLC) has recommended that retirement communities should be considered a vital part in the Australian Government's initiative to fulfill the Housing Australia Future Fund ...Read more
Property
Australians adjust financial strategies amid changing property market dynamics
The 2023 calendar year saw Australian borrowers acquiring a total of $300.9 billion in new loans for property purchases, marking a 12.7% decrease from the previous year. Read more
Property
Split home loans unlocking doors for Aussie buyers
Australians are teaming up to dive into the real estate market and seize the advantages of home ownership, with the trend of split home loans surging as family and friends unite to buy properties ...Read more
Property
Real estate investment: Spotting high-growth potentials
Investing in real estate has long been a favoured approach for Australians looking to grow their wealth. Read more
Property
Granny flats become Aussie families' cost-effective solution to soaring living costs
As the cost of living skyrockets, a forward-thinking trend is sweeping across Australia – granny flats are becoming a favoured living arrangement for older Aussies seeking comfort and proximity to ...Read more
Property
Homebuyers grapple with extended savings period amid affordability crisis
Gone are the days when an Australian dream home seemed just within reach. The path to homeownership in Australia has extended by at least two arduous years, as revealed by the latest insights from ...Read more
Property
Hybrid development unlocks new potential for NDIS housing in metro hotspots
In a ground-breaking strategy aimed at addressing the stark imbalance between the location of Specialist Disability Accommodation (SDA) developments and the actual areas of demand, Aligned Disability ...Read more
Property
Property prices boosted by housing policies: RBA
The central bank has outlined the “pervasive” impact that policy has on property. Read more