SMLF - Size Investing And The Small-Cap Premium

2024-03-06 01:50:00 ET

Summary

• Size investing targets smaller and, generally, more nimble companies.
• Investing in low size is empirically and economically supported and can be easily accessed through low-cost ETFs.
• There are various ways to target the small size premium – including investing in style box, factors (which target the premium directly), small caps or equal weighting the broad market.

By Robert Hum, CAIA

What is size investing?

Size investing is an investment strategy that targets companies that are relatively smaller than their peers. Size investing has been around for decades.

One of the most seminal pieces on investing in the small-cap premium was from Rolf Banz in where he found smaller-cap companies outperformed their large-cap peers. ¹ ...

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