Small-cap stocks can outperform the STI, if investors know where to look

INVESTORS tend to focus on blue-chip stocks on the benchmark Straits Times Index (STI). But market watchers say small-cap counters should not be overlooked as they could offer portfolio diversification and deliver market-beating opportunities.

However, analysts suggested that investors, before casting their lots with these small-cap stocks with a total market value of less than S$2 billion, should pay close attention to their underlying businesses, and their track record for paying dividends.

According to Azure Capital chief executive Terence Wong, investors should take a closer look at small-cap stocks with good track records, especially those that have delivered dividends despite challenging times.