Second, relative to larger caps, smaller cap equities bottomed in mid 1995 and are building momentum. This points to higher returns on small caps over large caps in the next few years. Evidence shows Canadian small caps are returning to favour indicating improved returns in the foreseeable future. As a result, small improvements in annual returns mean large increases in retirement assets. Higher returns with lower risk is an ideal asset allocation result for all investors.
Most investors hold cash, bonds and equities.
Diversification covers managers, investment styles, economies and currencies. But often overlooked is diversification into the medium to small cap sector. To have more capital at retirement. This means an RRSP including smaller caps can be substantially larger. If you adjust for inflation and taxes, Guaranteed Investment Certificates, Bonds and Treasury Bills do not increase purchasing power in any meaningful amount.