As Geoff Dailey, Head of the US Equities team, explains in this short video, several tailwinds make this moment a compelling opportunity to invest in US small-cap growth companies.
Geoff notes that small capitalisation stocks have been subject to the biggest market discount versus large caps in decades. There’s a wealth of catalysts that could unlock that value discrepancy: ‘Animal spirits’ have been set loose by the prospect of companies reshoring, deregulation, artificial intelligence developments and the new pro-growth US administration.
The economy is strong and the Federal Reserve is on an easing track. Cheaper money should benefit small caps in particular. In addition, a potentially big year for mergers & acquisitions presents a favourable context. Such a positive setting opens the way for small-cap company earnings growth to accelerate.
BNP Paribas Asset Management’s US small cap strategy focuses on finding idiosyncratic, mispriced stocks of disruptive, market share-gaining companies, while managing risk tightly. Top of our list today are the tech and healthcare sectors where small, innovative growth companies are breaking new ground in AI, automation, cloud computing, robotics, medtech and genetics.
