Small Cap Stocks Poised to Outperform in Recovery

July 13, 2020, By smallcapfirm,

U.S. small cap stocks could soon outperform the S&P 500.

“We are just exiting a seven-year underperformance cycle partially driven by the popularity of mega stocks, particularly the FAANGs and investors have been forced into mega cap stocks because if you are benchmarked against the S&P 500 and you don’t own Facebook, Apple, Netflix etcetera, you are going to trail the index, and that sucks money out of the small cap sector,” says Premier Miton Fund Manager Nick Ford, as quoted by CNBC.

“Where we are now is a situation where valuations are at historic lows, we are towards the end of the cycle, and small caps will benefit from an economic recovery in the U.S. at a greater degree than many of the large cap stocks, which gave a substantial amount of overseas earnings, so investors looking for a domestic recovery play should definitely look at this space.”

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