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Small cap inefficiencies, index chasing & where active investors thrive

This episode dives into the distortions index funds create in the small cap space and how active investors can exploit inefficiencies. We discuss inclusion effects, IPO flows, capital misallocation, and portfolio mistakes to avoid.

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About this episode

In this Australian Investors Podcast episode, your host Owen Rask is joined by Luke Laretive and Ben Richards (Seneca Financial Solutions) to discuss:

  • The flaws of small cap index investing
  • How inclusion in ASX indices drives mispricing
  • Lessons from Catapult, Objective Corp & Sigma
  • Mistakes small cap investors should avoid

If you love learning about small cap investing, subscribe to the Australian Investors Podcast on ⁠Apple⁠, ⁠Spotify⁠, or ⁠YouTube⁠!

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Topics covered

  • How ETFs and index funds distort the small cap landscape
  • Why active managers can still outperform in small caps
  • What index inclusion does to share prices (examples from Catapult, EOL, Objective)
  • Why more companies are gaming the index system (e.g. Sigma, Guzman y Gomez)
  • Common small cap investing mistakes and how to avoid them

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