We analyzed the performance of small caps vs. large caps since the late 1980s to find out which has generated superior returns during tough economic times.
A number of recession indicators are either flashing red or on the cusp of doing so. And, as bottom-up stock-pickers, we don’t need to look far to find evidence that these are challenging times for companies.
Investors may ask themselves if now is the time to skew equity allocations to more liquid large caps. From an emotional perspective, this feels like a logical investment strategy. The data on investment returns, however, suggest quite the opposite.
Important Risks: Investing involves risk, including the possible loss of principal. • Small- and mid-cap securities can have greater risks and volatility than large-cap securities. • Foreign investments may be more volatile and less liquid than U.S. investments and are subject to the risk of currency fluctuations and adverse political, economic and regulatory developments. These risks may be greater, and include additional risks, for investments in emerging markets.
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