US small-cap stocks are trading near 10-year lows on various metrics, which disregards their typical resilience in periods of rising interest rates and slower economic growth. By taking a contrarian view, investors can benefit from a currently attractive risk/reward constellation.
Listen to our Talking heads podcast with Geoff Dailey, US small-cap portfolio manager, and chief market strategist Daniel Morris. They first discuss the reasons behind small caps’ recent underperformance – which has enhanced the investment case – and then their prospects in a world marked by deglobalisation and inflationary pressures.
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Formerly known as ‘Market weekly’, Talking heads brings investors the in-depth insights on topics that really matter to them, analysis of the world and markets through the lens of sustainability and more great conversations with investment experts.
Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience.
Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice.
The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.
Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.