Signs that yet another wave of COVID-19 is taking a greater hold in the United States, as it has in some European countries, could once again push investors out of economically sensitive stocks and into technology companies, which are expected to better weather short-term growth fluctuations. Some investors remain wary of small caps, which over the past decade have lagged overall, with the Russell 2000 rising 230% against a 285% gain for the S&P 500. Jacob, of Jacob Asset Management, has pared back holdings in megacap stocks Alphabet (GOOGL.O) and Facebook parent Meta Platforms (FB.O), while favoring smaller companies such as OptimizeRx (OPRX.O) and Digital Turbine (APPS.O). 'You could be in some forgotten, little small-cap stock and get reasonable nominal growth on that.' 'Now you donвЂ™t have to be in a FAANG stock to get some reasonable growth,' said Mike Petro, portfolio manager of the Putnam Small Cap Value Fund, using a common acronym for massive tech and growth stocks such as Apple (AAPL.O) and Amazon (AMZN.O). The improving picture for smaller companies comes as a relief to investors looking for ways to diversify out of the megacap technology stocks that have led markets higher for most of the last decade, with the top five companies alone comprising more than 23% weight in the S&P 500. 'After trading pretty much sideways for seven months, you had a pretty nice breakout,' Carlson said. Analysts at BofA Global Research said the disparity in valuations between larger companies and smaller ones suggests high single-digit price returns annually for the Russell 2000 over the next decade compared with slightly negative annual returns for the S&P 500.Д¬huck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana, said his firm has added more small-cap exposure in the past four months, including shares of shipping company Matson (MATX.N) and semiconductor firm Onto Innovation (ONTO.N). economy is expected to expand 4% next year, compared with its long-term average of 2.5%, and believe small caps are a вЂњpure playвЂќ on domestic growth. His firmвЂ™s growth stock funds 'probably have our highest weightings ever' in small-cap shares compared to large, Jacob said. вЂњSmaller-cap stocks on a relative basis just look much more attractive,вЂќ said Ryan Jacob, chief investment officer of Jacob Asset Management. The forward price-to-earnings ratio of the Russell 2000 compared to the large-cap Russell 1000 (.RUI) recently stood at 24% below its long-term average, while small caps also trade at historical discounts on other measures such as price-to-book and price-to-sales, according to BofA Global Research. growth expected next year, some investors now believe small caps are a bargain. With a blistering S&P 500 rally stretching valuations on large-cap stocks and above-trend U.S.

The Russell 2000 is up 19% this year against a 25% rise for the S&P 500. They floundered in subsequent months, when technology stocks took the marketвЂ™s reins amid worries over whether the Delta variant of the coronavirus would stifle the economic rebound. Small caps, which have a median market capitalization of $1.2 billion in the Russell 2000, rallied in the early months of 2021 as investors bet that smaller firms would benefit more from a broad U.S.

Micro cap stocks 2021