Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by Invesco Perpetual UK Smaller Companies. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.
For the best part of a decade bond yields have sat at historic lows, leaving investors in somewhat of quandary when it comes to accessing income. In this context, the case for equities appears compelling.
However, not all equities are made equal. Over the same period, US equity valuations have soared to historic highs, to the extent that many investors have expressed concerns over valuations for two years or more. By contrast, UK equities were de-rated following the UK’s vote to leave the EU in June 2016, with small-cap UK equities especially punished.
On top of this, small caps had been underperforming large caps anyway, with the length of underperformance especially striking from a historical perspective as small caps have tended to outperform their larger counterparts.
In light of all this, there is a significant case for investors to consider an allocation to small-cap equities. Yet, the managers of Invesco Perpetual UK Smaller Companies trust emphasise that the appeal of small-cap equities extends beyond the current market and macroeconomic context.
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