Portfolio Manager States Small-Cap Stocks are Essential for a Well-Balanced Portfolio

Investing in Small and Mid-Cap Stocks: Why You Shouldn’t Overlook Them

When looking at the current market landscape, it’s easy to be drawn to the impressive gains of large-cap tech stocks driving the S&P 500 to a 15.5% advance. However, small and mid-cap stocks have not fared as well, with the Russell 2000 only up roughly 1% year to date. Despite this underwhelming performance, investors should not overlook these smaller names, according to Julie Biel, chief market strategist at Kayne Anderson Rudnick.

Biel emphasizes the importance of including small and mid-cap stocks in a balanced investment portfolio. These sectors may not be seeing the same level of earnings growth as their larger counterparts, but they offer unique opportunities for savvy investors. The makeup of these sectors, including regional banks and real estate investment trusts, makes them more leveraged and susceptible to the current higher rate environment.

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As a portfolio manager specializing in small and mid-cap growth stocks, Biel takes a long-term investment approach and focuses on businesses with strong earnings growth and clean balance sheets. Her own portfolio has provided an impressive 18.9% return on equity over five years, outperforming the Russell 2500 Growth index.

Biel cautions investors to be selective when investing in small and mid-cap stocks, as not all companies in these sectors are profitable. However, she believes that active management and a focus on companies with solid fundamentals can lead to success in this space.

At Extreme Investor Network, we believe that diversifying your portfolio to include small and mid-cap stocks can provide opportunities for growth and outperformance in the long run. By following the strategies laid out by experts like Julie Biel, investors can navigate the unique challenges and potential rewards of investing in smaller companies. Don’t shy away from small and mid-cap stocks – they may just be the key to achieving your investment goals.

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