For people considering asset management options in Cheshire and Oswestry, analysts are saying small-cap opportunities are currently the best in over 30 years. This trend reflects a rise in pension fund interest and increasing demand for IPOs.
Why is this happening now? Downing fund manager Judith Mackenzie says this is due to a number of well-run and profitable UK small-cap firms enjoying healthy growth prospects. Alongside what she describes as artificially low valuations, she argues this picture presents an ‘exciting’ investment opportunity.
The figures would appear to back her up. Long-term data from Numis shows that small caps brought 13.9% annual returns in the period ending September 2025 compared with 11.2% for large caps. Interest has in part been stimulated by the Mansion House Accord, which urges pension funds to direct capital towards UK businesses. There have been unprecedented enquiries, for instance, regarding local authority pension funds.
Fund managers have reported a wide range of pension funds seeking to increase investment in the small-cap sector at a time when market conditions are as benign as they have ever been. Over the next year, some are hoping to see ISA reform, business relief for AIM, the abolition of stamp duty on IPOs, and other changes that could unlock capital and drive confidence.
The general feeling is that institutional investors are shifting away from the US and now sense good value in the UK small-cap sector, whilst rewarding opportunities are to be found in the AIM markets, with shrewd stock selection.
