Investing Ideas

Closing the global small cap portfolio gap

How allocations to small cap global stocks can improve diversification, resilience, and long‑term return potential in an evolving market.

By: Shah Badkoubei

Updated: 6/23/2026

Key Takeaways

Many global equity portfolios remain unintentionally concentrated in large companies, leaving a meaningful portion of the opportunity set underrepresented.
Global small caps provide diversification that is both economic and behavioral, with returns driven more by local fundamentals as opposed to global macro positioning.
The opportunity set is broader and less efficient, with double the stocks versus the MSCI ACWI, less analyst coverage, and quantitative metrics that point to opportunities for active security selection.
Excluding global small caps may increase concentration risk in an investment environment led by a narrow set of mega cap stocks and themes.
Since the ’90s, global small caps generated a better return than global large caps.

Get the full white paper

Closing the global small cap portfolio gap

Next steps to consider

International equity

See how our broad global research expertise and key regional presence help our international strategy teams uncover opportunities worldwide.

Learn more

Investment strategies by asset class

Face your most complex challenges head on with help from our strategies and custom solutions across asset classes.

Learn more

Related insights

View all

Investing Ideas

Mid cap stocks: Finding companies in the heart of their growth trajectories

Mid cap stocks have offered similar growth vs. large caps and more mature and stable companies vs. small caps.

For important information, see the full linked content.

1266531.1.0

03BA96D0D83345E089E6588CFFE739D0

This information is intended for the sole use of institutional investors. Retail investors and any other persons who are not institutional investors should not act or rely on this information.

This site provides information solely for institutional investors and consultants regarding the products and services of the Fidelity Investments companies of FIAM LLC, a U.S. registered investment advisor, or Fidelity Institutional Asset Management Trust Company, a New Hampshire trust company. By viewing, you agree that you are an institutional investor or consultant and agree to the Institutional Investor web site Terms of Use.

Past performance is no guarantee of future results.

Unless otherwise expressly disclosed to you in writing, the information provided in this material is for educational purposes only. Any viewpoints expressed by Fidelity are not intended to be used as a primary basis for your investment decisions and are based on facts and circumstances at the point in time they are made and are not particular to you. Accordingly, nothing in this material constitutes impartial investment advice or advice in a fiduciary capacity, as defined or under the Employee Retirement Income Security Act of 1974 or the Internal Revenue Code of 1986, both as amended. Fidelity and its representatives may have a conflict of interest in the products or services mentioned in this material because they have a financial interest in the products or services and may receive compensation, directly or indirectly, in connection with the management, distribution, and/or servicing of these products or services, including Fidelity funds, certain third-party funds and products, and certain investment services. Before making any investment decisions, you should take into account all of the particular facts and circumstances of your or your client's individual situation and reach out to an investment professional, if applicable.

Registered investment products (including mutual funds and ETFs) and collective investment trusts managed by Fidelity Management Trust Company (FMTC) are offered by Fidelity Distributors Company LLC (FDC LLC), a registered broker-dealer. Fidelity Institutional Asset Management (FIAM) investment management services and products are managed by the Fidelity Investments companies of FIAM LLC, a U.S. registered investment adviser, or Fidelity Institutional Asset Management Trust Company, a New Hampshire trust company. FIAM products and services may be presented by FDC LLC, a non-exclusive financial intermediary affiliated with FIAM and compensated for such services.