Sep 21, 2012

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Why FTSE SMall Cap Stocks Make Sense

What Are FTSE Small Cap Stocks?

You may not have heard of FTSE small cap stocks before today.  These stocks are valuable sets of investments.  FTSE stands for Financial Times and the London Stock Exchange.  The FTSE Small Cap index comprises a list of companies with small market capitalization.  Membership on this list is treasured by aspiring small cap companies.

Small cap companies are businesses which market capitalization somewhere between one billion dollars and five billion dollars.  They are usually not as impressive as large cap companies nor are they as long lived.  Many investors are motivated to buy these stocks because there low price offers the possibility of significant returns.  More expensive stocks are not likely to return huge profits unless you own a great many of them.

One of the keys to making money on the stock market is owning a large number of shares.  When you have many shares even the slightest upward trend in stock price can generate profits for investors.  The problem with large cap stocks is that most investors can only buy a limited number of shares.  This prohibits them from enjoying smaller gains in stock price.

Why Should You Have FTSE Small Cap Stocks in Your Portfolio?

Some investors stocks their portfolios with large cap stocks.  They take comfort in the reliability of these stocks.  They over look the possibilities of FTSE small cap stocks.  These lower priced stocks have more potential for gains.  It is a good idea to have large cap stocks in your portfolio because they offer conservative stability.

By investing in lower priced stocks, an investor takes a certain amount of risk.  These stocks are not as tried and true as stocks with a larger market capitalization.  However, a portfolio containing only conservative investments is unlikely to generate significant profits in the near future.  If you want your portfolio to have a little more potential, FTSE small cap stocks are an ideal inclusion.  Their listing in this select group underlines their potential with the confidence of a respected consensus.

Some of the stocks on this index include the following:
• Alternative Investment Strategies
• Baring Emerging Europe
• British Polythene Industries
• Consort Medical
• Development Securities
• Eastern European Trust
• Henderson Diversified Income
• Lavendon Group
• Polar Cap Global Healthcare
• SVM Global Fund
• Value and Income Trust

This is just a short list of the attractive companies on the list. There are many more FTSE small cap members that merit a look from investors.

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