- Falling energy sector profits and a rising dollar will be less of an earnings headwind for small-cap stocks given lower energy sector exposure and a greater proportion of sales derived domestically. (Small-caps derive 18–20% of earnings outside the US compared to 30–35% for large-caps.)
- Historically, when small-cap earnings estimates are rising at a faster rate than earnings estimates for large-caps, small-caps have outperformed.
- Following last year’s under-performance, small-cap valuations (relative to large-caps) are now attractive relative to the last five years.
Please use the following link for more investment insights on US Small Caps: US Small Cap Equity