According to the Australian Financial Review, BT Investment Management Ltd (ASX: BTT) believes investors seeking growth should look towards microcap stocks listed on the ASX.
Typically, when the economy slows, many enterprising investors look to small-cap stocks for growth because some may be less prone to the direction of the broader economy.
"There's no free kicks from the economy and in many cases the large cap companies don't have the capability or the ingenuity to build new technologies," Paul Hannan, BT's head of smaller companies, was quoted as saying during the Australian Microcap Investment Conference this week.
Mr Hannan said BT favours companies with little-to-no debt and solid track records of profit growth.
One of BT's success stories is retailer RCG Corporation Limited (ASX: RCG). RCG owns The Athlete's Foot and has exclusive distribution agreements for many leading apparel brands throughout Australia and New Zealand.
Since buying RCG shares in 2008, Mr Hannan said the business had grown well. "In seven years this business has continued to go from strength to strength, it is now a $600 million market cap business."
Other stocks in the BT portfolio include printed circuit board technology business, Altium Limited (ASX: ALU), and the growing diversified wealth management company run by Mark Bouris, Yellow Brick Road Holdings Ltd (ASX: YBR).
Foolish takeaway
In my opinion, small-cap stocks are a great way to get exposure to industries that are otherwise unattainable from the blue-chip stocks.
