Julie Dickson, Head of Client Portfolio Management, Equities and Global Investment Solutions, Aviva Investors

- The first half of 2011 saw great volatility in the small caps sector as investors turned to the stability of large cap stocks
- Within the small cap sector, there has been a widespread selloff which has affected all small caps, including those that have sound fundamentals
- The 2H2011 is expected to see small caps swing back but investors need to be aware of higher volatility in small caps. During highly speculative markets, volatility in small caps actually falls as speculators shun small caps and focus on the more liquid large caps.
- The main difference between EM and developed markets is that of debt burdens, which have an impact on the performance of small caps in the areas of financing, and the ability to access debt