Forty per cent of professional investors are expecting the cost of obtaining information and monitoring small and micro-caps to increase over the next three years, as they receive less attention from brokers and analysts.
This compares to just 22% of investors that believe the cost will fall and that data will become easier to source, according to new findings from investment holding company, MBH Corporation.
A survey carried out in November among 117 professional investors – 73 in the US, 30 in the UK and 14 in Germany – found that five in six professional investors (83%) see small and micro-cap stocks as a more transparent alternative to private equity investments, due to their real-time pricing, greater liquidity and lower fees.
Despite this, the findings also showed that 42% of the investors surveyed are predicting the level of coverage for the micro-cap market by brokers and research houses to decline over the next 12 months – with 5% anticipating a dramatic fall. Just 15% of investors indicated they expect the level of coverage to increase.
MBH Corporation CEO, Callum Laing, commented: “In recent months, coverage of the microcap market by brokers and research houses has fallen, partly due to MiFID II. Our research shows that many professional investors expect this trend to increase, which will make it even harder for them to spot potential small market investment gems.”
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