UK pension funds need more small caps

Nick Hamilton, head of global equities at Invesco Perpetual, thinks UK pension funds are particularly underexposed to small caps. Investors, generally, should increase their exposure to small caps which benefit from faster earnings growth, he says. Despite the perception of increased risk, the performance of large caps was actually worse during the crisis in 2000 after the tech bubble burst and again in the 2007-08 financial crisis.