In this episode of “What’s the Risk?” we take a look at the historic performance of the S&P/ASX Small Ordinaries Index. Some people would know ETFs that seeks to track the performance of this index as Blackrock’s ISO and State Street’s SSO.
Small companies have long been understood to outperform larger companies, due to higher risk, but in Australia his index has shown a consistent track record of underperformance against larger counterparts.
We discuss why that might be and Peter highlights a conversation he had with Ken French that adds some further understanding. This is history and doesn’t automatically mean the future performance will be as poor, so will you write off Australian small caps?
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