Broadening Emerging Markets Exposure: The Role of Small Caps

Friday, February 27, 2026

Emerging markets small caps are often treated as a niche allocation. In reality, they represent the majority of companies across emerging markets by number, yet only a small share of total market capitalisation — creating a structurally broader and less concentrated opportunity set than traditional large- and mid-cap benchmarks .

In Broadening Emerging Markets Exposure: The Role of Small Caps, Ativo examines how this segment shifts country and sector exposures, reduces reliance on mega-cap narratives, and expands the cross-sectional breadth available to systematic investors. The paper also addresses the implementation discipline — liquidity, cost, and governance — required to translate that breadth into durable, institutional outcomes .

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