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Review of UK small-cap returns


Numis report co-authored by Elroy Dimson of Cambridge Judge.

Review of UK small-cap returns
The Numis Smaller Companies Index (NSCI), which measures returns from investing in small- and mid-cap UK companies, ended 2014 with a positive return of 0.8 per cent, almost identical to the 0.7 per cent positive return of the FTSE 100 index.

A new NSCI report was co-authored by Elroy Dimson, Chairman of the Newton Centre for Endowment Asset Management at Cambridge Judge Business School and Emeritus Professor at London Business School.

Dimson, together with the report’s co-author Paul Marsh, Emeritus Professor of Finance at London Business School, had undertaken the original research, published in the 1980s, that helped create both the NSCI and the FTSE 100 Index.

Numis Corporation, the investment banking and stockbroking company that sponsors the NSCI, said the 2014 performance of smaller companies followed two years of “outstanding” small-cap performance in 2012 and 2013.

Among “bright spots” for 2014 were a recovery in initial public offerings and the lowest level of NSCI bankruptcies ever recorded. The NSCI entered 2015 very close to the all-time high it reached during the course of 2014.

Over the period 2000-2014, smaller companies outperformed larger companies in 85 per cent of worldwide markets, the report added.

“The start of 2015 marks the diamond jubilee of the NSCI, since the index back history starts in 1955,” said the report’s co-authors, Dimson and Marsh. “Over the last 60 years, UK smaller companies have delivered truly astonishing returns to investors.”