Big Caps or Mids Caps or Small Caps

The table below shows the returns over different time periods if you had invested in each of the top 50 stocks (Big Caps), the next 50 (Mid Caps) and the next 200 (Small Caps) - which collectively make up the S&P/ASX 300 Accumulation Index, where Caps refers to the capitalisation of a stock.

From 1 November 2007 (top of the market) until 31 August 2009, the bigger the market capitalisation, the better your return. A similar result occurred from 1 November 2007 (top of the market) until 6 March 2009 (bottom of the market).

However, the reverse is true from 6 March 2009 (bottom of the market) to 31 August 2009 and during the bull run from 1 March 2003 to 1 November 2007 (top of the market), where the smaller the market capitalisation, the better your return.

It may be tempting to take a Small Cap exposure now to get a bit more outperformance in the current bull market. However, trying to time the market may be fraught with danger. Alternatively, implementing a consistent investment strategy allows you to grow your wealth steadily but surely over the long-term.

Total Returns from Big, Mid and Small Cap Indexes Over Different Periods

Important Information

The above information provides an overview or summary only and it shouldn’t be considered a comprehensive statement on any matter or relied upon as such. The above information doesn’t take into account your personal objectives, financial situation or needs. It’s important for you to consider these matters before making any financial decision and I recommend you seek help from a financial adviser.