A fund manager overseeing over $1.2 bln shares the 9 mid-cap stocks that are best placed to outperform in the economic recovery
Summary List Placement The vaccine rollout is now in full swing, and countries are gradually preparing to reopen their economies. And this is giving small- and mid- cap companies around the world an opportunity to "spring" back, which offers massive opportunities to investors, according to Trevor Gurwich, portfolio manager of American Century Investment's global small cap equity fund and its international opportunities fund. There's historical precedent to this arguement. Following every major crash of this century, these so-called "smid-cap" stocks have outperformed their larger cap peers. For example, following the 2008-2009 financial crisis, the small cap universe rocketed up over 106%, while the large caps "only" gained about 78%. The boost to the SMID cap market following the post-coronavirus recovery should follow suit, Gurwich said. Small- and mid-cap companies are inherently closely linked to the real economy and real consumer activity and therefore, they suffer more during times of recession, and gain more in times of economic expansion. "We have ample fiscal and monetary stimulus, and there is a real interest in politicians to get small businesses up and running again," he said, adding that "you're pretty well set up for another good year in small-cap universe." This crisis has caused huge asset price inflation for growth stocks, with investors focusing on several "market darlings", neglecting the smaller cap names, he said.
A fund manager overseeing over $1.2 bln shares the 9 mid-cap stocks that are best placed to outperform in the economic recovery
Summary List Placement The vaccine rollout is now in full swing, and countries are gradually preparing to reopen their economies. And this is giving small- and mid- cap companies around the world an opportunity to "spring" back, which offers massive opportunities to investors, according to Trevor Gurwich, portfolio manager of American Century Investment's global small cap equity fund and its international opportunities fund. There's historical precedent to this arguement. Following every major crash of this century, these so-called "smid-cap" stocks have outperformed their larger cap peers. For example, following the 2008-2009 financial crisis, the small cap universe rocketed up over 106%, while the large caps "only" gained about 78%. The boost to the SMID cap market following the post-coronavirus recovery should follow suit, Gurwich said. Small- and mid-cap companies are inherently closely linked to the real economy and real consumer activity and therefore, they suffer more during times of recession, and gain more in times of economic expansion. "We have ample fiscal and monetary stimulus, and there is a real interest in politicians to get small businesses up and running again," he said, adding that "you're pretty well set up for another good year in small-cap universe." This crisis has caused huge asset price inflation for growth stocks, with investors focusing on several "market darlings", neglecting the smaller cap names, he said.