In recent years, a number of asset managers have cottoned on to the idea that small-cap investing does not necessarily have to be all about capital growth. The sector can also provide an attractive and diversified income stream, and a number of small-cap funds have been launched with an income mandate. "Imitation is the highest form of flattery," jests Ed Beal of Aberdeen Asset Managers.
Income from small-caps is not a new theme, he maintains. And he should know - his fund, the Dunedin Smaller Companies Investment Trust has long been the highest yielding fund in the AIC's small-cap sector. Its current net yield of 3.5 per cent is almost twice the sector average.
But this doesn't mean that growth has been sacrificed in the pursuit of dividends. The fund is still very much, as its board likes to describe it, "a widows and orphans fund" and while the aim has been to move up the income scale, this has not been done at the expense of capital. Dunedin Smaller Companies Investment Trust's investment objective remains centred around long-term growth - not total return or income.