INSIGHTS & NEWS
Diversification with Small Cap Canadian Equities
The “Small Cap Effect”, or the ability of small cap stocks to outperform large cap stocks, is alive and well in the Canadian Market-place. Furthermore, a number of active small cap managers exhibit low volatility profiles, combined with very low correlations to large cap managers, and as a result offer superior diversification when combined with large cap managers. Our analysis showed an aver-age return improvement of over 4{3ecd1be486a9e87a4f4369018c2c82e0b20ae56f3805f05eebdf95b8ef27da05} , with a risk reduction of over 1{3ecd1be486a9e87a4f4369018c2c82e0b20ae56f3805f05eebdf95b8ef27da05}, can be achieved through diversification with small cap.
