Small is beautiful

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Small is beautiful, yes you heard that right, small is beautiful. I have been curious how small cap stocks have been performing over a period of time especially during this period of very testing time. To my surprise, quite well.

I'm just picking three funds since I don't have any access to Bloomberg terminal data and etc. The three funds are from Public Mutual, Prudential and OSK. I like Public Mutual and Prudential holding better than OSK. OSK's names are more momentum driven while Public Mutual and Prudential holdings have more of mid cap qualities. If you happened to pick around the bottom and hold it for about 10 years or if you are smart enough to get out during bull run, you should be able to get 10-15% annual compound return. It has outperformed KLCI even HSI or DJIA over a long period of time, just something for you to think about.

The funds are sitting on relatively high level of cash right now, Public Small cap has about 30% cash as of 31 October 2008. Prudential's fund is sitting on 18% cash as of 28 November 2008. OSK has the highest level of cash, almost 56% cash as of 28 November 2008. High level of cash will eliminate these funds to sell at the wrong time to meet redemption but I smell opportunity. They can generate better return when the market start to move up.





I have been thinking of deploying some cash into one of these funds for Turtle portfolio as part of diversification to work with the limited capital. You may argue that is not fair because there is no stock picking skills here, that's the beauty as a private investor - I have the freedom to let other to grow wealth or I do it myself depending on the situation. Pooling resources is a better idea for now.