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UK small-caps hit all-time highs, say LBS experts

16 Jan 2017


NSCI Annual Review reports extraordinary long-term returns


Elroy Dimson and Paul Marshweb

The Numis Smaller Companies Index (NSCI), which measures the performance of smaller quoted UK companies, ended the year at an all-time high, according to London Business School experts.

London Business School Emeritus Professors of Finance, Elroy Dimson and Paul Marsh, who, together with Scott Evans, produce the index, found that over its 62-year history the NSCI has beaten the FTSE All-Share by an annualised rate of 3.4% per annum.

Elroy Dimson, Scott Evans and Paul Marsh, said: “Analysing the long-run history of the NSCI provides interesting insights into what drives small-cap returns. The work we undertook this year for Numis Corporation on overseas sales exposure and currency sensitivity of UK smaller companies, proved to be very informative in terms of explaining the impact that Brexit has had on relative returns.”

During an extraordinary year for global finance and politics, the Numis smaller companies indices experienced a high level of volatility, the authors say. In the immediate aftermath of the Brexit vote, the NSCI fell sharply with smaller companies bearing the brunt of the re-pricing as investors placed a higher value on stocks with greater overseas exposure.

In the second half of the year the NSCI staged a very strong recovery, up 24% from its low-point in June, and ending the year on an all-time high. Despite the recovery, smaller companies could not quite regain the ground they had lost relative to large-caps in the post Brexit sell-down, and ended the year 3.9% behind the FTSE All-Share.

Highlights of the NSCI Annual Review 2017


  • The NSCI produced a total return of 12.8% over the year. This compares to 16.8% for the FTSE All-Share.

  • The very small companies in the Numis 1000 index proved more resilient returning 16.1% over the year.

  • Over the last 5 years, the NSCI and NSCI (excluding investment companies) have produced an annualised return of 15.4% and 16.5% respectively, compared to 10.1% for the FTSE All-Share.

  • Since 1955, the NSCI has achieved a compound return of 15.1%, 3.4% p.a. above the FTSE All-Share.

  • A £1 investment in the NSCI made at its starting point in 1955 would be worth £6,067 by the end of 2016. This compares to £968 if invested in the FTSE All-Share over the same period.


Summary and highlights of NSCI Annual Review 2017