2016 news uksmallandmidcapsoutperformin2015 883x432 1

UK small and mid-caps outperform in 2015

14 January 2016

The article at a glance

The Numis Smaller Companies Index (“NSCI”) Annual Review 2016, co-authored by Elroy Dimson of Cambridge Judge Business School, reported today that the …

The Numis Smaller Companies Index (“NSCI”) Annual Review 2016, co-authored by Elroy Dimson of Cambridge Judge Business School, reported today that the NSCI ended 2015 with a return that was significantly ahead of the FTSE All-Share and the FTSE 100 indices.


Professor Elroy Dimson
Professor Elroy Dimson

The NSCI’s key XIC index, which excludes investment companies and is the main benchmark used by institutional smaller-company investors, found that the NSCI XIC had a total return of +10.6 per cent in 2015, compared to +1 per cent for the FTSE All-Share Index and -1.3 per cent for the FTSE 100.

The annual NSCI Annual Review is published by Numis, the independent banking and stockbroking group. It is co-authored by Elroy Dimson, Chairman of the Newton Centre for Endowment Asset Management at Cambridge Judge Business School, and Paul Marsh, Emeritus Professors of Finance at London Business School.

Other highlights of the NSCI XIC:

  • Over the last four years, the NSCI XIC has given an annualised return of 17.9 per cent, more than double the FTSE All-Share return of 8.5 per cent.
  • Since 1955, the NSCI XIC has achieved a 15.4 per cent annualised return, 3.6 per cent per annum above the FTSE All-Share.
  • Launched at 1000 in 1987, the returns index reached an all-time high on 3 June 2015 of 17,857.
  • During the period 2000 through 2015, smaller companies outperformed larger ones in 90 per cent of worldwide markets, achieving an average annualised small-cap premium of 5.9 per cent.

Alongside the NSCI, Numis has launched a new Mid Cap index that targets the bottom 20 per cent by value of UK equities, excluding the smallest five per cent. Highlights on the Numis Mid Cap are as follows:

  • During 2015 the Numis Mid Cap, ex-investment companies (XIC), returned 13.3 per cent, far ahead of the FTSE All-Share which returned 1.0 per cent (including dividends).
  • Since 1955, the Numis Mid Cap XIC has achieved a 14 per cent annualised return, 2.3 per cent per annum above the FTSE All-Share.
  • In additional analysis covering six separate decades, whenever smaller companies did better than large ones (which was in five of the six decades), the Mid Cap achieved a return that was between small and big companies.

Oliver Hemsley, Chief Executive of Numis, said:

The NSCI is the definitive benchmark for monitoring the performance of smaller- and mid-sized companies in the United Kingdom. During 2015 we were very pleased to assist Professors Dimson and Marsh with the launch of the Numis Mid Cap index, adding a further element to the long term perspective provided by the Numis index series.

Professors Elroy Dimson and Paul Marsh, the authors of the report, said:

We knew that exposure to smaller companies has had a big impact on long-term returns. But the most exciting finding from this year’s research is the profound influence of other factors within the small-cap segment of the market. Value, momentum, low-volatility and other investment styles can be critical for investment success.