During the first six months of 2018, small-cap stocks enjoyed the good times bred by a bull market that at this writing has not yet slowed down.
Surveying the small cap landscape after a period of strong gain, Royce co-CIO Francis Gannon is selectively bullish -- but generally wary of the considerable risks for growth stocks and defensive industries.
Thoughts on Brexit, tariffs, and the need to look beyond a company's home country to understand the true scope of its business.
Small cap stocks
Royce co-CIO Francis Gannon explains why he thinks select small-cap cyclicals look well positioned to lead in the months ahead.
Despite a wild finish, the second quarter was still markedly more bullish and less volatile than the first—and saw a shift in small-cap style leadership that we’ll be watching closely.
Chart of the Week
Source: Bloomberg, October 12, 2018. *Forward P/E values are based on Bloomberg Estimates Earnings Per Share. Past performance is no guarantee of future results. Indexes are unmanaged, and not available for direct investment. Index returns do not include fees or sales charges. This information is provided for illustrative purposes only and does not reflect the performance of an actual investment.
Chart of the Week
Last week's markets left investors looking to economics for clues; Italy faced up to the EU; China's trade surplus ballooned
The case for a strategic allocation to international small cap is well supported by historical data.
From upcoming U.S. midterm elections to ongoing deregulation, four small-cap specialists discuss what they believe many investors are not considering -- but should be.
Co-CIO Francis Gannon explains why upward revisions to CapEx spending could be very good news for small-cap cyclicals.
Bill Hench looks at the dynamics in the retail industry and outlines the factors that he thinks will help some companies to survive and thrive.
History suggests that it's time for value stocks—as well as cyclical sectors—to take the lead in small-caps, yet investors seem to be resisting the shift. What's behind the disconnect?
...and probably here to stay, notes Royce co-CIO Francis Gannon. His advice: tune out the noise about tariffs and rising rates, and instead focus on cyclical small caps with improving earnings and global exposure.
Increased volatility is obscuring the rising strength of small-cap earnings, which we believe should ultimately translate into leadership for certain cyclical sectors—those that combine profitability, relatively attractive valuation, and global exposure.
Small cap stocks
If the Russell 2000 index were a company, how attractive would it be to investors? Royce co-CIO Francis Gannon has his doubts.
Looking beyond the U.S.
Why should investors consider maintaining a small but consistent allocation to this often-overlooked asset class? The answer is simple: superior risk-adjusted returns with very low correlation to traditional equities.
Smaller companies in cyclical sectors that do business abroad -- or with other U.S. firms that have global exposure -- could be well positioned to benefit from improving global growth.
All investments involve risk, including loss of principal. Past performance is no guarantee of future results. Please see each product’s webpage for specific details regarding investment objective, risks associated with hedge funds, alternative investments and other risks, performance and other important information. Review this information carefully before you make any investment decision.