Small caps – the most important things in a nutshell
Small caps are companies with a market value in the two to three-digit million range. In contrast to the standard values from the German leading index DAX or from the EURO STOXX 50, small caps are often active in niche markets. Because of the low market volume and low trading volume, small caps are given little attention by institutional investors. Small caps are therefore also referred to as “second-tier companies”.
An investment in the so-called “small stocks” is associated with higher opportunities, but also increased risks for investors. Shares of Small caps usually fluctuate significantly more than the shares of well-known corporations. Double-digit price gains and losses within a short period of time are therefore more the rule than the exception for small caps. The selection of the “right” individual shares, known as stock-picking, is therefore of particular importance.
Deutsche Börse has been listing the 70 largest German small caps in the SDAX since September 24, 2018. Previously, only 50 small caps were represented in the index. The Smallcap Index usually rises faster than the DAX in rising markets, and the opposite is true in falling markets.
Investors can use ETFs to invest almost directly in the SDAX. In addition, investors can selectively invest in small caps with selected investment funds and products. In recent years, the DWS German Small / Mid Cap LD and the Lupus alpha Smaller German Champions have made it onto the podium. Both performed better than the SDAX.
However, investors posted the highest price gain with the Value Stars Germany index certificate, which has increased by a total of 157% since it was launched at the end of 2013. (As of: December 31, 2020). This investment can be traded under ISIN DE000LS8VSD9 via the Stuttgart Stock Exchange or in direct trading via Lang & Schwarz. on www.value-stars.de Interested parties can also find comprehensive information on this investment.