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Forget Exporters And The Weak Euro, It's About Europe Small Caps

  • Euro Stoxx Small Index is up four times as much as large caps
  • They're seen as having more earnings-growth potential
GRIMSBY, UNITED KINGDOM - FEBRUARY 23: Imported cars sit on the dockside at Grimsby docks, one of the key election constituencies on February 23, 2015 in Grimsby, United Kingdom. As the United Kingdom prepares to vote in the May 7th general election many people are debating some of the many key issues that they face in their life, employment, the NHS, housing, benefits, education, immigration, 'the North South divide, austerity, EU membership and the environment.
Photographer: Christopher Furlong/Getty Images
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Buying shares of the biggest European exporters seemed like a winning strategy earlier this year as the euro weakened.

But as overseas demand failed to live up to its billing, smaller companies have ended up being the much better bet. They’ve rallied four times as much this year through yesterday, up 8.8 percent. Companies in the Euro Stoxx Small Index benefited from the recovery at home and offered shelter from an emerging-market slowdown, the commodity rout and the Federal Reserve’s interest-rate increase.