“Growth in small-cap business is still intact, and they will continue to do well,” Gary Bradshaw, portfolio manager at Hodges Capital Management, said in a Fiscal Times article. “Large-caps are flush with cash, and we think there’s going to be a lot of acquisitions out of small-caps.”
Investors are moving back to the small-cap category after high valuations and a sell-off in growth stocks dragged down smaller companies. The Russell index showed a forward price-to-earnings ratio of 24 at the end of 2013 while the S&P 500 P/E ratio was 15.7, the largest difference since at least 1978, according to Citi data. [Small-Cap Conundrum]
Currently, the Russell has a forward P/E of 19.2, compared to the S&P 500’s 16.7, according to Morningstar data.
iShares Russell 2000 ETF
For more information on small-capitalization stocks, visit our small-cap category.
Max Chen contributed to this article.