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The Small-Company Advantage: Fact or Fiction?

We examine both sides of the debate and offer ideas for how you might use small-company stocks in your own portfolio

Morningstar Editors 16.08.2013

Great things come in small packages. It's not only a cliche--it's a principle that many people invest by. Smaller companies are more nimble and volatile than large companies, they note. So smaller companies must offer better returns than larger companies. Besides, they point out, there's evidence to back up the idea of a small-cap premium.

Yes, there's evidence, but it stands on shaky ground. Many financial professionals now question whether there really is any advantage to investing in small-company stocks.

This lesson examines both sides of the debate and offers ideas for how you might use small-company stocks in your own portfolio.

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