From Morningstar: 2025-06-23 03:41:00

Morningstar analysts discuss the emerging picture for UK small caps, defining them as the bottom 10% of market cap in the UK, with an average market cap of around 750 million. Confidence in UK small caps is increasing, with small caps up 5% compared to large caps’ 10% increase year to date. Concerns exist about the shrinking AIM market and its impact on the health of UK PLC. The AIM market has decreased from 1,700 companies in 2007 to around 650 today, with many citing excessive costs and red tape as reasons for leaving. The FTSE Small Cap Index has also been shrinking, and the need for new IPOs is crucial to bring new blood into the market. Despite uncertainties such as tariffs and global disruptions, UK small cap stocks are relatively shielded due to a large portion of their revenue coming from domestic sources. Experienced management teams are well-equipped to navigate challenges and uncertainties in the market.



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