Smidcap U.K. stocks returned 26.4% in 2010, outperforming the FTSE All-Share index by 11.9 percentage points, according to a Royal Bank of Scotland report Thursday.
Over the 56-year history of the RBS Hoare Govett Smaller Companies index, smaller companies have outperformed larger ones in the FTSE All-Share index by an annualized average 3.4%.
Also, small-cap stock performance outpaced that of large caps in 21 of the 26 countries studied, including in the U.S., according to the report, “RBS HGSC Index 2011,” written by London Business School professors Elroy Dimson and Paul Marsh.
“Small- and midsized companies have had excellent performance over the short-term and the long-term,” Mr. Marsh said in an RBS news release.
Mr. Marsh pointed out that an investment of £1,000 ($1,585) in the RBS HGSC index in 1955, with dividends reinvested, would have been worth £3.3 million as of Dec. 31, vs. £620,000 for the same £1,000 invested in the FTSE All-Share index.
RBS expects smidcap stocks to continue to outperform in 2011, Stephen Ford, head of U.K. midmarkets at RBS, said in the release: “Restructuring benefits coupled with strong balance sheets and top-line appreciation should continue to underpin earnings upgrades over the course of 2011.”