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Written by: Forrest St. Clair and Benjamin Treacy
Why this differentiated asset class could be helpful in the investment mix.
Key Takeaways
- Since 1929, the performance of large cap U.S. stocks versus small caps has run in cycles lasting about seven years, on average, making the current cycle of U.S. large cap outperformance an outlier.
- Valuations for U.S. small caps are in their cheapest quintile since 1990, which has increased the historical odds of U.S. small caps outperforming large caps over the next 5 to 10 years.
- A Fidelity study concludes that active management has tended to work for small cap U.S. stock investors, partly because it has been a less efficient asset class than large caps, to the benefit of stock selection.
Get the full white paper: The case for owning small cap U.S. stocks
Related: The Case for Using a Sector Based Framework in Equity Portfolio Construction
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