Likely to the chagrin of frustrated investors, the Russell 2000 Index is only modestly higher since the Federal Reserve lowered interest rates. That confirms that patience will be required in order to realize big gains with smaller stocks.
Investors continue to broaden out their portfolios this year, seeking previously overlooked and undervalued industries and asset classes. Small-caps remain a coiled spring, lagging the broader market but with the potential for outperformance should conditions prove favorable.
Small-cap stocks may not be showing signs of June gloom this summer. If that's the case, investors may want to consider getting the Neuberger Berman Small-Mid Cap ETF (NBSM).
With the April sell-off in the rearview mirror, investors may want to start looking at SMIDcap opportunities again to capture value-tilted upside. That's because their large-cap counterparts have recovered.
As U.S. growth outlooks face increasing challenges this year, diversifying beyond growth-heavy, large-cap benchmarks could prove beneficial. SMIDcap stocks offer a number of opportunities for investors.
The Cboe Volatility Index (VIX) spiking in early April may have caused investors to scurry from small-caps. However, there are still value-oriented opportunities to find in the market.
Tariffs create significant challenges for U.S. economic growth this year. Although Neuberger Berman forecasts low growth, the firm believes two categories of equities may benefit due to economic signals at the beginning of April.
Active strategies may prove beneficial in volatile, complex markets this year. Equity investors looking to diversify away from large-cap concentration should consider the Neuberger Berman Small-Mid Cap ETF (NBSM) for its performance versus the benchmark year-to-date.
I recently had the chance to talk with Brett Reiner, managing director, portfolio manager on Nueberger Berman's small-cap team. Reiner shared the competitive advantages a large team makes when investing in small- and midcap companies.
Small-cap equities benefited from a post-election rally, but have receded since. However, the headwinds that are stifling small-cap momentum may only be temporary, opening opportunities to obtain small-cap exposure now before an eventual rally.
Investors may be surprised to learn how little small-cap exposure is needed to provide meaningful diversification to a portfolio concentrated in large-cap growth. The S&P 500 is 20 times larger than the Russell 2500.
Advisors and investors looking to capture potential tailwinds for small-cap stocks headed into 2025 would do well to consider active management. Given the disparities between top- and bottom-performing small-caps, strategies that target high-quality small-caps could prove beneficial.