In this episode of “What’s the Risk?”, we examine the historical performance of the MSCI World ex Australia Small Cap Index (net dividends, AUD), an index representing international small-cap companies.
This lesser-known benchmark offers a window into a segment of the global market often overshadowed by larger firms. Surprisingly, since its inception in 1999, this index has outperformed the MSCI World ex Australia Index, which tracks larger companies, prompting us to explore the role of recency bias in investment decisions.
We question whether investors overlook small caps due to recent trends favoring larger firms, potentially missing out on long-term growth.The discussion delves into the risks and rewards of small-cap investing, highlighting how these companies can drive higher returns but also carry greater volatility.
Peter unpacks historical data, encouraging viewers to reconsider their assumptions about market segments.For those seeking exposure, Vanguard’s VISM ETF, listed on the ASX, aims to replicate the MSCI World ex Australia Small Cap Index’s returns before fees, expenses, and taxes. This episode underscores the importance of diversifying beyond large-cap stocks and challenges conventional wisdom with data-driven insights. By addressing recency bias, we empower investors to make more balanced, informed choices for their portfolios.
Watch the “Global Small Caps VISM?” video here.
This represents general information only. Before making any financial or investment decisions, I suggest you consult a financial adviser to take into account your personal investment objectives, financial situation and individual needs. Anyone looking to build a portfolio should seek financial advice to find out which strategy is right for them, if you are a high net worth investor looking financial advice then you should consider a financial adviser with high net worth experience, they can help you identify your goals and put in place a reliable strategy to pursue them.
