Over the last 12 months the S&P/ASX Small Ordinaries (Index: ^AXSO) (ASX: XSO) has outperformed the S&P/ASX 200 by a wide margin thanks to its 16% gain.
I believe this gain demonstrates why having a little exposure to small-cap shares can be a good thing for a portfolio.
With that in mind, here are five small-cap shares which I think investors ought to be watching closely this year:
Big Un Ltd (ASX: BIG)
I have been very impressed at the way this video technology company has been growing its cash receipts. In its last update management advised that it expects to achieve global cash receipts from customers in excess of $22 million for the second-quarter of FY 2018. This will be an increase of 447% from the prior corresponding period.
Fastbrick Robotics Ltd (ASX: FBR)
Fastbrick Robotics is the robotics company behind the impressive Hadrian X bricklaying robot. The technology caught the eye of US-giant Caterpillar last year, leading to the equipment manufacturer coming on board as a major shareholder and strategic partner. Caterpillar is aiming to sell Fastbrick Robotics' technology to its global customer base.
Lepidico Ltd (ASX: LPD)
This junior lithium miner will be one to watch this year thanks to the lithium boom. However, Lepidico isn't your standard lithium miner, it owns an exciting piece of technology that has attracted Galaxy Resources Limited (ASX: GXY) onto its share registry. The technology is a metallurgical process that has successfully produced lithium carbonate from non-conventional sources.
Swift Networks Group Ltd (ASX: SW1)
This entertainment and telecommunication services company provides fully integrated solutions for the resources, hospitality, lifestyle village, and aged care accommodation sectors. I believe there is a huge opportunity for the company in the aged care sector due to Australia's ageing population.
Wattle Health Australia Ltd (ASX: WHA)
Whilst it is still early days, Wattle Health could be one to watch if its products gain traction in the massive Chinese infant formula market. Early this year the company is expected to be granted CFDA approval to sell its infant formula products in the market. If Chinese consumers take a liking to the product then sales could rise significantly.