BT Investment Management have identified what they say is an overriding theme in equities that has created opportunity in small caps

BT Investment Management have identified what they say is an overriding theme in equities that has created opportunity in small caps. The overriding theme of today is that companies that can provide a good level of surety around their profit outcomes are well being well rewarded, even if that profit growth is conservative. The Fund Manager argues that while the domestic cycle remains soft investors will continue to reward safety and predictability. Naturally, through its associated 'small cap' label, emerging businesses are penalised by a market that perceives this segment as being lower quality and higher risk. We disagree with these connotations and look forward to taking advantage of dislocations among quality growth names that have been caught in a cyclical downdraft. Names with strong leveraged earnings potential such as TradeMe will, in our opinion, re-rate in the long run despite difficulties in the short term.


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