Finance & Fury Podcast

Welcome to Finance and Fury, The Say What Wednesday Edition. Where each week we tackle questions from you – This week's question is from Gab Hi Louis, I have a question I've been pondering lately, around small-cap ETFs or LICs. It seems like the whole reason for investing in small caps (the fact that you can get high capital growth) is negated by the construct of such instruments. As an example, let's say we have 40 small caps in one of these funds, statistically, only a handful of them will succeed, but the moment they grow, they would automatically be removed from the fund (at a profit, of course). This means you don't get the opportunity to see 100x or 1000x benefit from a future Amazon or Facebook, because they got sold at 10x, while the poor performing ones still bring down the overall performance of the fund. What do you think? Is this a reason to avoid small-cap ETFs or LICs? Thanks, Gab Great questions and points! First - What is small-cap? - The index, the S&P/ASX Small Ordinaries Accumulation In