Small-caps are in favor these days as we come out of a recession. Long-term, small caps tend to outperform large-caps. There’s simply no reason to be overweight large-caps these days.
The lesson here is not to pay attention to just one asset class at the exclusion of others. After all, if you’ve been ignoring small-caps and sticking with the big ones, you’ve sacrificed some performance.
It’s easy to spot these opportunities. We use a simple strategy of watching the trend lines, which you can read about in more detail and learn how to implement here. [Why A Simple ETF Strategy Is Best.]
For full disclosure, Tom Lydon’s clients own SCHA.
Tisha Guerrero contributed to this article.