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If, or when, the stock market(s) take a dive, should someone waiting for this event, holding a large percentage of cash, buy into the ASX 20/50 or buy smaller companies outside the top 50? That is, in light of the dismal return of most of the “blue chips” over the last few years, should we use the next decline to buy those companies with recent proven growth returns or just buy the usual suspects and wait for the market to return?
A: You ask a really good question, and I think the answer depends somewhat on your starting point, and time frame.
Sure, the top 20 has underperformed over the last two years – but it has outperformed smaller companies over the last 5 and 10 years. Peter mow thinks there is some value in the top 20.
With that said, I would always have something invested in smaller companies. You might like to look at my article that reviewed some small-cap funds: https://switzersuperreport.com.au/the-best-mid-and-small-cap-funds/
