Of course, the implication is that the potential contribution of emerging industrial activity to future Canadian output, employment and incomes is in some measure bound up in the current experience of small-cap stocks. Will requisite investment reach them? Perhaps this cannot be taken for granted in public securities exchanges where there is an enormous and perennial concentration of capital resources in the highest quintile. This happens because the vast majority of individual and institutional investors, including pension funds, gravitate to the top. Such behaviour is certainly understandable given the qualities of large-cap, high-information, high- price stocks associated with corporations that are leaders in the national economy.
While small-cap stocks have been around since time immemorial, it is only recently that evidence of their cyclical out-performance has endeared them to some investors. In the early 1990s, earnings from small-cap issues appeared to moving upwards once again, attracting the attention of Canadian pension funds and other institutional investors then proceeding to allocate more assets to public equity. The result was much more pervasive and sustained pension investment and what has been dubbed the "institutionalization" of small-cap ownership (or a component of what is now the institutionalized ownership of all public equity).Endnote 90