Number of Unique Names in Top 10 Ranking Since 2014 to Date Over the past decade, less than 20 companies have consistently ranked among the top 10 by market capitalization in both the U.S. and China. This reflects the dominance of a small group of large firms within each market. Image: Goldman Sachs Global Investment…
ISABELNET Cartoon of the Day If the U.S. trade deficit is a national emergency, then the small-cap and Nasdaq bear markets need life support! Happy “Hump” Day, Everyone! 🐫🐪😎
Valuation – Russell 2000 vs. S&P 500 The current undervaluation of U.S. small-caps relative to the S&P 500 presents an attractive investment opportunity for those looking to diversify their portfolios and potentially capture higher returns in the coming years. Image: Fundstrat Global Advisors, LLC
S&P 500 Fwd. Earnings Growth and Russell 2000 Fwd. Earnings Growth The recovery in EPS growth has been driven by a small number of large-cap companies, which may indicate a late-cycle extension in the economic cycle. Image: Morgan Stanley Research
Valuation – Relative Forward P/E: Russell 2000 vs. Russell 1000 Small-caps may be an attractive option for long-term investors looking to diversify their investment portfolios, as they offer relatively cheaper valuations compared to large-caps. Image: BofA US Equity & Quant Strategy
Performance – Ratio of Russell 2000 Index to Nasdaq Composite Small-cap stocks are currently at a record low relative to the Nasdaq Composite. Factors that could drive small-cap stocks to outperform include a rise in M&A and IPOs, robust earnings growth, and changes in interest rates. Image: BofA Global Investment Strategy
Performance of Different U.S. Fama French Factor Returns U.S. small-cap value has been the best bet over the past 25 years. However, small-cap value stocks are typically more volatile in the short term, making a long-term investment strategy necessary. Image: BofA Research Investment Committee
Net Buys by Size Segment Bofa’s clients maintain their preference for large-caps, while showing less interest in small-caps and mid-caps. Image: BofA Securities
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 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 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