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Traditionally, Singapore’s blue chip large caps appeal to investors given their stability and attractive dividends. However, small and mid-caps have garnered more investor interest recently, following the launch of the Monetary Authority of Singapore’s Equity Market Development Programme in 2025 which is aimed at improving liquidity and revitalising the small and mid-cap companies.
The table below shows that across 2012–2025, no single market-cap segment has consistently outperformed. Small caps led in years such as 2012, 2019 and 2020, mid-caps rallied in 2014, 2022 and 2023, while large caps outperformed in 2017, 2024 and 2025.
Source: Bloomberg. In USD terms. As of March 2026. Indices – MSCI Singapore Small Cap Index. MSCI Singapore Small and Mid-Cap Index. MSCI Singapore Large Cap Index.
Small caps tend to benefit most when investors rotate away from defensiveness and look for growth. Post the European debt crisis and downgrade of the US’ sovereign debt rating in 2011, Singapore small caps rallied in 2012 as risk appetite improved, and valuations, operating leverage and earnings benefitted from the early phase of the economic recovery. Meanwhile, large caps’ defensiveness came into focus in 2013, which was a year characterised by the global taper-related uncertainty and more selective risk taking. Large caps demonstrated their resilience again in 2018, as global equity markets came under pressure from escalating US-China trade tensions and multiple interest rate hikes by the US Federal Reserve. In 2018, Singapore large caps fell less than their small and medium cap counterparts.
The difference in returns between the best and worst performing market cap segments has averaged 13% over the last 15 years, ranging from as small as 3% in some years to as large as 49% in others. As such, a market cap tilt in a portfolio can result in a very different outcome.
What it means for you
Singapore equity portfolios are often skewed toward large caps, reflecting the dominance of banks and blue-chip names in headline indices. While this can provide portfolio stability, it also means that investors can miss out when market leadership shifts elsewhere.
An actively managed portfolio that has a structural allocation to large caps while allocating meaningfully to small and mid-caps may help portfolios navigate changing market conditions.
The dispersion of returns across market cap segments also highlights the opportunity set that active managers can have. By selecting stocks across small, mid and large caps, active managers can potentially participate more fully in the market upside while managing downside risks across cycles.
Tip
Don’t limit your exposure to a particular market segment. Having a portfolio with a core allocation to large caps can help provide stability through volatility while a deliberate allocation to small and mid-caps can offer upside when market leadership changes.
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