Tuesday, May 26, 2009

Small-Cap Is An Important Component in a Portfolio

I have owned some form of small-cap equity assets in my portfolio for some time now. The reason is simple - they have offered good returns over the years and have made a nice impact on my overall portfolio. This additional return comes with some risk. Small-caps come with more risk than larger cap equity and can swing widely. This is why I have chosen to use only index funds as my investment of choice for this asset class. My investment money is spread over a large number of small-cap stocks so that the individual security risk is reduced significantly.

To highlight the importance of small-caps in a portfolio, especially at specific times in the market like coming out of a bear market, there is a video put out by Soundinvesting.com that I think is worth watching. It offers some interesting advice in a straightforward and simple approach.

Let us know how you manage small-caps in your own portfolio - use the comment section below.

This article was written by The Dividend Guy. You may email questions or comments to me at info@thedividendguyblog.com.


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