For investors who like small caps but remain underweight: Why wait?

Consider the beleaguered small-cap asset class: Institutional investors have largely been underweight small caps for years. Today, they represent less than 4% of the broader equity market, the lowest level in nearly 100 years. This allocation decision has been correct, as small caps have lagged large for 9 of the last 10 years. As inflation moderates and interest rates normalize, small caps may be at an inflection point with attractive valuations and accelerating earnings growth relative to large. Several other factors weigh in favor of small caps. The trend of deglobalization and nearshoring of supply chains are primed to benefit the asset class for the next decade. Accelerating M&A and the resurgence of IPOs bode well for small-cap active managers. Innovation in AI and biotechnology stands to benefit smaller companies. In addition to inflation data and central bank policies, the US election in November could be a catalyst, as small caps have historically tended to outperform following elections. Join American Century Investment’s senior investment director Mike Rode and senior client portfolio manager Jim Shore as they discuss the state of small caps and how a confluence of market conditions could lead to small cap outperformance after years of trailing large caps. Speakers: Mike Rode, CFA, Vice President, Senior Investment Director, American Century Investments Jim Shore, CFA, Vice President, Senior Client Portfolio Manager, American Century Investments