Nordic small caps: Is the party over?
Let’s assume you invested 100 Euros in the World index at the first day of 1999. As we write mid-January 2020, you would’ve had a very satisfactory investment increase. But what if you had invested your money in the Nordics instead, more specifically in Small Caps?
As we write mid-January 2020, you would’ve happily witnessed your investment in the World Index increase to 370 Euros by now, yielding an average annual return of ca 6.4%. In other words it’s fair to say the global stock market has been a nice place to be over the past 20 years. But you already knew that…
What would have happened if you invested your 100 Euros in the Nordics instead?
If you had invested your 100 Euros in the MSCI Nordics, your account would at the same point show approximately 505 Euros, equivalent to an annual return of ca 8%. Even better!
You probably knew that as well.
Let’s however assume you invested in global small caps instead, through MSCI World Small Cap? 100 Euros would have been 775 Euros by now, returning more than 10% annually on average.
The global small cap premium has been present for the past 20 years, but this is no secret either...
What if I told you Nordic small caps do even better?
If I told you we can combine the strong fundamentals of the Nordic market and the small cap premium and come up with something even better, would you believe me?
100 Euros, imaginarily invested in MSCI Nordic Small Cap at the start of 1999, would actually be more than 1260 Euros by now, corresponding to an annual average return of almost 13%.
