376. Is this the start of a new small-cap cycle?

Small-caps have historically outperformed over the long term, but recent years have been dominated by large-cap momentum and narrow market leadership. Nish Patel, manager of the Global Smaller Companies Trust, discusses why the backdrop may now be shifting. We cover how smaller companies can deliver faster earnings growth, the importance of focusing on quality to reduce fragility and why valuations are at levels that have historically signalled new cycles in small-cap performance. Nish also breaks down the Trust’s three key investment categories, highlights opportunities in industrials and long-cycle commodities, and explains why Japan is currently the most exciting hunting ground for new ideas.

What’s covered in this episode: 

• Faster growth potential in global small-caps
• Why quality filters help reduce fragility
• Valuations at cycle turning levels
• Interest rate cuts as a tailwind
• Economic broadening beyond tech
• Industrial sector opportunities
• Three investment categories: compounders, quality cyclicals, long-cycle assets
• Japan’s corporate reform boom
• Why US valuations limit ideas
• Rising M&A interest in high quality small-caps

More about this fund: The Global Smaller Companies Trust invests in smaller companies from around the world. Manager Nish Patel believes that these businesses experience superior growth over the long term compared with larger companies. His goal is to go where other equity researchers won’t, in order to find hidden gems at attractive prices. 

Learn more on fundcalibre.com

Please remember, we’ve been discussing individual companies to bring investing to life for you. It’s not a recommendation to buy or sell. The fund may or may not still hold these companies at the time of listening. Elite Ratings are based on FundCalibre’s research methodology and are the opinion of FundCalibre’s research team only.