2013 has been the year of smaller companies - Spend & Save - Money - The Independent

2013 has been the year of smaller companies

Firms which avoided global woes provided the best returns

Investors who backed smaller firms this year have been proved astute for the second year running. Four of the five strongest investment fund sectors had a small cap focus.

The Japanese Smaller Companies sector was the most profitable, returning 36 per cent over the year. Japan was boosted by Abenomics, the term coined to describe the policies being pushed through by Japan’s Prime Minister Shinzo Abe.

It consists of “three arrows” – named after the Japanese legend that individual arrows can break, but three held together are very strong. The policies he’s backing are bold monetary relaxation, flexible fiscal stimulus, and reviving the private sector.

But there is a wider reason driving smaller company funds to outperform those backing large firms, believes Tom Purdie from FundExpert.co.uk.

“There is a vast selection of stocks for fund managers to choose from,” he said. “This means a large range of possibilities, and significant opportunities to build a highly diversified portfolio. Larger, often global, businesses are perpetually in thrall to the latest central bank action.”

He also pointed out that unlike larger companies, smaller companies are not overwhelmed by broader macro trends. Being in niche markets allows them to maintain good performance regardless of what is happening in the wider economy.

On the other side of the coin, the worst-performing sector of the year was Global Emerging Markets, mainly on the back of taper fears in the US, which came to fruition in the middle of last week.

“The witching hour was 22 May, when Ben Bernanke mooted the gradual withdrawal of money printing,” recalled Mr Purdie. “Before that date the FTSE Emerging index was already falling. But from 22 May the slide accelerated.”

However, he said that there are still opportunities in emerging markets over the long term. “Emerging markets continue to grow 4 per cent faster than developed markets, and many have much more youthful demographics,” he said. That’s crucial as young populations drive growth.

But he warned that investors should expect more turbulence in emerging market equities in 2014 especially as the market focuses on the arrival of US tapering.

“For those wanting to exploit the long-term opportunity of emerging markets, drip-feeding will deal with the problem of market turbulence, allowing you to limit short-term stress while beingpositioned for long-term potential.”

The best-performing individual fund of the year was AXA Framlington Biotech. “It’s interesting to see a tech-focused fund in the top 10 in a year which saw the Twitter IPO and Bitcoin fluctuating valuations hit the headlines,” Mr Purdie said.

Meanwhile, 2013 proved to be another sorry year for gold investors. Gold funds propped up the performance tables, carrying on their poor showing from 2012. However, 2013 was more severe for gold. The worst losses of 2012 were around 30 per cent. In 2013 the worst gold fund slumped more than 60 per cent.

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

News
John Travolta is a qualified airline captain and employed the pilot with his company, Alto
people'That was the lowest I’d ever felt'
Life and Style
healthIt isn’t greasy. It doesn’t smell. And moreover, it costs nothing
News
peopleThe report and photo dedicated to the actress’s decolletage has, unsurprisingly, provoked anger
Property
Home body: Badger stays safe indoors
property
PROMOTED VIDEO
News
The programme sees four specialists creating what they believe are three perfect couples, based on scientific matchmaking. The couples will not meet until they walk down the aisle together
tvUK wedding show jilted
Arts and Entertainment
US pop diva Jennifer Lopez sang “Happy Birthday” to Gurbanguly Berdimuhamedow, president of Turkmenistan
musicCorporate gigs become key source of musicians' income
Arts and Entertainment
You've been framed: Henri Matisse's colourful cut-outs at Tate Modern
artWhat makes a smash-hit art show
Arts and Entertainment
While many films were released, few managed to match the success of James Bond blockbuster 'Skyfall'
filmsDaniel Craig believed to be donning skis as 007 for first time
Sport
Mikel Arteta pictured during Borussia Dortmund vs Arsenal
champions league
Voices
Yes supporters gather outside the Usher Hall, which is hosting a Night for Scotland in Edinburgh
voicesBen Judah: Is there a third option for England and Scotland that keeps everyone happy?
Arts and Entertainment
Pulp-fiction lover: Jarvis Cocker
booksJarvis Cocker on Richard Brautigan
Arts and Entertainment
Robin Thicke and Pharell Williams in the video of the song, which has been accused of justifying rape
music...and he had 'almost no part' in writing it
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Sales Executive

    £20 - 24k (Uncapped Commission - £35k Year 1 OTE): Guru Careers: We are seekin...

    Payroll & Accounts Assistant

    £20 - 24k + Benefits: Guru Careers: This is a great opportunity for an enthusi...

    SQL Developer - Watford/NW London - £280 - £320 p/d - 6 months

    £280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...

    Senior BA - Insurance **URGENT**

    £400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...

    Day In a Page

    Mystery of the Ground Zero wedding photo

    A shot in the dark

    Mystery of the wedding photo from Ground Zero
    His life, the universe and everything

    His life, the universe and everything

    New biography sheds light on comic genius of Douglas Adams
    Save us from small screen superheroes

    Save us from small screen superheroes

    Shows like Agents of S.H.I.E.L.D are little more than marketing tools
    Reach for the skies

    Reach for the skies

    From pools to football pitches, rooftop living is looking up
    These are the 12 best hotel spas in the UK

    12 best hotel spas in the UK

    Some hotels go all out on facilities; others stand out for the sheer quality of treatments
    These Iranian-controlled Shia militias used to specialise in killing American soldiers. Now they are fighting Isis, backed up by US airstrikes

    Widespread fear of Isis is producing strange bedfellows

    Iranian-controlled Shia militias that used to kill American soldiers are now fighting Isis, helped by US airstrikes
    Topshop goes part Athena poster, part last spring Prada

    Topshop goes part Athena poster, part last spring Prada

    Shoppers don't come to Topshop for the unique
    How to make a Lego masterpiece

    How to make a Lego masterpiece

    Toy breaks out of the nursery and heads for the gallery
    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Meet the ‘Endies’ – city dwellers who are too poor to have fun

    Urbanites are cursed with an acronym pointing to Employed but No Disposable Income or Savings
    Paisley’s decision to make peace with IRA enemies might remind the Arabs of Sadat

    Ian Paisley’s decision to make peace with his IRA enemies

    His Save Ulster from Sodomy campaign would surely have been supported by many a Sunni imam
    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    'She was a singer, a superstar, an addict, but to me, her mother, she is simply Amy'

    Exclusive extract from Janis Winehouse's poignant new memoir
    Is this the role to win Cumberbatch an Oscar?

    Is this the role to win Cumberbatch an Oscar?

    The Imitation Game, film review
    England and Roy Hodgson take a joint step towards redemption in Basel

    England and Hodgson take a joint step towards redemption

    Welbeck double puts England on the road to Euro 2016
    Relatives fight over Vivian Maier’s rare photos

    Relatives fight over Vivian Maier’s rare photos

    Pictures removed from public view as courts decide ownership
    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    ‘Fashion has to be fun. It’s a big business, not a cure for cancer’

    Donatella Versace at New York Fashion Week