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Our View

Historically, lower starting valuations in any particular asset class have often been associated with stronger returns going forward. The Tech Bubble offers prime context: By 2000, large-cap growth stocks had just finished a spectacular decade of returns and their valuations were subsequently high; conversely, small-cap stocks had just finished a rather pedestrian decade of returns and were much more reasonably valued. 

Once the bubble popped in March 2000, a regime shift ensued. Throughout the 2000s, small-cap value outperformed large-cap growth stocks, and large-cap valuations declined. This set large caps up to perform well again from 2011 to 2021.  

Today, based on valuations, we think the groundwork may be in place for the next regime shift in favor of small caps. 


Important Risks: Investing involves risk, including the possible loss of principal. ● Small-cap securities can have greater risks, including liquidity risk, and volatility than large-cap securities. ● Different investment styles may go in and out of favor, which may cause underperformance relative to the broader stock market.

All information provided is for informational and educational purposes only and is not intended to provide investment, tax, accounting, or legal advice. As with all matters of an investment, tax, or legal nature, you and your clients should consult with a qualified tax or legal professional regarding your or your client’s specific legal or tax situation, as applicable. The preceding is not intended to be a recommendation or advice. Tax laws and regulations are complex and subject to change.

The views expressed here are those of the authors and should not be construed as investment advice. They are based on available information and are subject to change without notice. Portfolio positioning is at the discretion of the individual portfolio management teams; individual portfolio management teams, and different fund sub-advisers, may hold different views and may make different investment decisions for different clients or portfolios. This material and/or its contents are current as of the time of writing and may not be reproduced or distributed in whole or in part, for any purpose, without the express written consent of Hartford Funds.

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About The Authors
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Head of Client Portfolio Management Group
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Senior Investment Director
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Client Portfolio Analyst
Kevin Bales
Client Portfolio Manager

The material on this site is for informational and educational purposes only. The material should not be considered tax or legal advice and is not to be relied on as a forecast. The material is also not a recommendation or advice regarding any particular security, strategy or product. Hartford Funds does not represent that any products or strategies discussed are appropriate for any particular investor so investors should seek their own professional advice before investing. Hartford Funds does not serve as a fiduciary. Content is current as of the publication date or date indicated, and may be superseded by subsequent market and economic conditions.

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