Chris Stott, CIO at Wilson Asset Management, looks at some of the reasons he believes small cap stocks have underperformed of late

Chris Stott, CIO at Wilson Asset Management, looks at some of the reasons he believes small cap stocks have underperformed of late. Since mid-2012, the All Ordinaries Index, which represents the 500 largest companies listed on the ASX, has risen 47%. Over the same period, the S&P/ASX Small Ordinaries Index, which tracks the performance of the ASX's small-cap companies (outside the top 100), has increased just 11.7%. The contrast between the two indexes is stark and particularly incongruous when you compare the two indexes over the preceding three years. Between March 2009 and June 2012 the Small Ordinaries Index outperformed the All Ordinaries by 9.6%. Stott believes this recent under-performance is an anomaly and can be put down to two factors. Firstly, the under-performance of mining services companies who dominate the small ords and secondly the strong performance of the Banks and Telstra. Read the full article here: (VIEW LINK)