New Research Predicts an Increase in Allocation from Institutional and Retail Investors to Small- and Micro-Caps Over the Next 12 Months

Core Insights - Horizon Aircraft has published research indicating a growing interest in small-cap and micro-cap stocks among fund managers, with expectations of increased allocations from both institutional and retail investors over the next year [1][2][5]. Group 1: Fund Manager Insights - A global study involving small and micro-cap fund managers with a total of $82.4 billion in assets under management found that 76% anticipate increased exposure to small and micro-caps from institutional investors in the next six to twelve months [2]. - Among fund managers, 34% believe that allocations to small and micro-caps could increase by 25% or more [2]. - 83% of fund manager respondents expect retail investors to increase their allocation to small and micro-caps, with 52% believing that this allocation could rise by more than 25% [3]. Group 2: Current Exposure Levels - One-third of fund managers describe the current exposure from institutional investors to small and micro-caps as underweight, with 21% indicating "slightly underweight" and 11% "extremely underweight" [4]. - The current level of exposure to small-caps is described as overweight by 4%, while for micro-caps, it is overweight by 23% [4]. - Retail investors are also seen as underweight in their allocations to small-caps and micro-caps, with 32% and 27% respectively, while 17% and 13% are considered overweight [4]. Group 3: Economic Context and Company Developments - The CEO of Horizon Aircraft noted that anticipated interest rate cuts and improving market conditions are likely to drive increased allocations to small and micro-cap stocks [5]. - Small and micro-cap companies are viewed as having higher growth potential compared to large-cap companies due to their smaller revenue bases and agility [6]. - Horizon Aircraft is developing the Cavorite X7, a hybrid eVTOL aircraft, which is expected to excel in various applications such as medical evacuation and disaster relief, with a gross weight of approximately 5,500 lbs and a maximum speed of 250 miles per hour [6][10].