US asset management giant BlackRock has launched a global equity small cap ETF, the iShares MSCI World Small Cap UCITS ETF, physically replicating the constituents of the underlying index.
The index provides access to over 4,000 small-sized companies from 23 developed market countries globally. In total, it accounts for around 14% of the free float-adjusted market capitalisation across each country.
David Moroney, head of iShares EMEA Product at BlackRock, highlighted that developed small caps represent almost 12% of the global equity universe which accounts for approximately $70trn in assets.
“Investors are increasingly diversifying their global equity allocation to include small-cap stocks, and they are using ETFs as a tool to do this in a cost-efficient manner.
“The macro environment is also encouraging investors to revisit their allocation to global small-caps. Acceleration in economic growth will benefit small cap stocks, as these companies tend to add to employment quicker and contribute to growth faster. At the same time, through their domestic focus, smaller companies tend to benefit from domestic growth policies and will be less impacted by future changes in global trade arrangements,” he said.
Deborah Yang, head of EMEA Index Product at MSCI, noted increasing demand by clients viewing global small caps as part of the MSCI investable market indexes.