Integrating Global Micro Caps in Your Portfolio

15 Pages Posted: 29 Aug 2017

Date Written: June 9, 2017

Abstract

In the research report, "The Next Big Thing Could Be Really Small: An Introduction to Global Micro-Cap Stocks," the Brandes Institute and Metis Global Partners explored the unique characteristics of global micro-cap (GMC) stocks and why they represent a compelling asset class for institutional investors. Findings included GMC's historical returns, diversification benefits and their vast and inefficient opportunity set.

Continuing our collaboration with Metis Global Partners, we explore how investors incorporate GMCs into their portfolios. 1. Micro-cap stocks can serve as a straightforward, active component of an existing equity allocation. 2. Due to their unique characteristics, micro caps may have a role as an alternatives allocation -- or as an "alternative" (or complement) to alternatives, such as private equity or hedge funds.

Of course, before adding any new asset class, due diligence efforts should investigate possible risks. Risks specific to global micro caps can include trading costs, liquidity, transparency and custody. At the same time, misperceptions about these issues have created opportunities, and this report will present several options for integrating GMCs into portfolios.

Keywords: global, micro, cap, stocks, value, investing

Suggested Citation

Institute, Brandes, Integrating Global Micro Caps in Your Portfolio (June 9, 2017). Brandes Institute Research Paper No. 2015-03. Available at SSRN: https://ssrn.com/abstract=2983975 or http://dx.doi.org/10.2139/ssrn.2983975

Brandes Institute (Contact Author)

Brandes Investment Partners ( email )

11988 El Camino Real, Suite 500
P.O. Box 919048
San Diego, CA 92191-9048
United States

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