Investing September 8, 2026 0 Comments

Why Singapore Small Caps Are Struggling Behind Large Caps – The Hidden Risk Every Investor Must Know Today

I was chatting with some friends the other day—and as you do, our conversation took a turn to stocks and stats. Last year, small cap stocks seemed to thrive, so naturally, I assumed the MSCI Singapore Small Cap Index must’ve outpaced its bigger brother, the MSCI Singapore Index. But guess what? The data told a different story. It’s a little like expecting the scrappy underdog to nab the trophy, only to find the seasoned champions still holding the crown—at least for now. With the MSCI Singapore Index being a tight-knit group of just 16 stocks, heavily weighted by the trio of banks making up around 60%, and the small cap index boasting a wider roster of 58 stocks, the contrast is stark. But here’s the kicker: while short-term numbers favor the blue chips, the long game suggests small caps might just have the last laugh. Ever wonder why markets flip the script like that? Let’s unravel the surprising tale behind these numbers and what it might mean for your portfolio’s future. LEARN MORE

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I was chatting with some friends online and decided to look up some stats. Since last year was pretty good for a lot of small cap stocks, I thought the performance of the MSCI Singapore small cap index would be much better than the MSCI Singapore index.

For reference, the MSCI Singapore index is a 16-stock index unlike the Straits Times index. And it is rather concentrated. This is its current holdings:

The 3 banks is about 60% of the index.

Here is the current holdings of the 58-stock MSCI Singapore Small Cap Index:

Here are some of the performance (in USD) if we take the data from 1999 to Aug 2026:

Time Period	MSCI Singapore Returns	MSCI Singapore Small Cap Returns
Year to date	26.9%	4.5%
Last 1 year	27.8%	9.1%
Last 2 year	37.0% p.a.	12.3% p.a.
Last 3 year	32.2% p.a.	10.9% p.a.
Last 4 year	25.0% p.a.	7.3% p.a.
Last 5 year	15.0% p.a.	5.1% p.a.
Last 10 year	10.9% p.a.	6.3% p.a.
Jan 1999 to Aug 2026	9.0% p.a.	10.1% p.a.

If you are not in Singapore blue chips you have badly lagged. I think some may use this data to either emphasize only blue chips are investable or that you have to pick stocks.

I am not sure if that is always the case.

If you look at the 27-year result, the small cap actually did better.

So what gives?

I think be open to the idea that there isn’t much permanence in the market. As some are review at this point, they may be disappointed with their choices not to be heavy in SGX, DBS, OCBC.

And so now they have to decide whether to switch after seeing like 130% performance in the last 3 years.

It is a wise decision if SGX, DBS, OCBC are the unicorn stocks that would always do better than the rest.

At the same time, some may find it wise to respect the base rate.

Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.

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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Fee-only Wealth Advisory Firm Providend. All opinions on Investment Moats are his own and does not represent the views of Providend.

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His investment broker of choice is Interactive Brokers, which allows him to invest in securities from different exchanges all over the world, at very low commission rates, without custodian fees, near spot currency rates.

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