Valuation – Relative Forward P/E: Russell 2000 vs. Russell 1000

Valuation – Relative Forward P/E: Russell 2000 vs. Russell 1000 For long-term investors looking to diversify their investment portfolios, small-caps may be an attractive option as they offer relatively cheaper valuations compared to large-caps. Image: BofA US Equity & Quant Strategy

Valuation – Russell 2000 Forward P/E

Valuation – Russell 2000 Forward P/E The April sell-off has brought the U.S. small-cap forward P/E ratio back below the historical average, suggesting a potential undervaluation of small-cap stocks and creating buying opportunities for long-term investors. Image: BofA US Equity & Quant Strategy

Russell 2000 Forward P/E vs. Subsequent 10-Year Annualized Returns

Russell 2000 Forward P/E vs. Subsequent 10-Year Annualized Returns Should long-term investors increase their allocation to U.S. small-cap stocks, given the potential for 9% annualized ten-year returns suggested by the absolute forward P/E for the Russell 2000? Image: BofA US Equity & Quant Strategy

Russell 2000 Technology Sector Relative to Total Index

Russell 2000 Technology Sector Relative to Total Index U.S. small-cap technology stocks have exhibited a noteworthy level of outperformance within the universe of U.S. small-cap stocks, which can be attributed to higher growth potential and the ability to innovate and disrupt traditional industries. Image: Morgan Stanley Wealth Management

Small-Caps – Trailing 12-Month Russell 2000 Return

Small-Caps – Trailing 12-Month Russell 2000 Return Goldman Sachs expects the Russell 2000 small-cap index to return 15% in the next 12 months, which suggests a positive outlook for small-cap stocks. Image: Goldman Sachs Global Investment Research

Small Cap Stocks – Relationship Between Relative Fwd P/E of Russell 2000 vs. Russell 1000 and Subsequent 10-Year Annualized Relative Returns

Small Cap Stocks – Relationship Between Relative Fwd P/E of Russell 2000 vs. Russell 1000 and Subsequent 10-Year Annualized Relative Returns Investing in small-cap stocks during periods when they are trading at a significant discount to large-cap stocks may present attractive opportunities for long-term investors. Image: BofA US Equity & Quant Strategy

Performance – Russell 2000 vs. S&P 500 Seasonality

Performance – Russell 2000 vs. S&P 500 Seasonality Small caps historically tend to outperform the S&P 500 from December to February. Allocating a portion of the portfolio to small cap stocks during this time may benefit investors. Image: Goldman Sachs Global Investment Research

Russell 2000 Returns After Last Rate Hike

Russell 2000 Returns After Last Rate Hike Should equity investors favor U.S. small-cap stocks following the last Fed rate hike? Image: BofA Global Investment Strategy