“When additional capital and demand goes into small caps, CSA is a great way to get diversified exposure, but we think a properly diversified portfolio should have an allocation to both small and large because it’s difficult to time the market sentiment with regard to small or large leadership,” added Dhillon.
The current bull market has been blazing down a path marked by FANG stocks, but this year has also seen a resurgence in small cap equities as evidenced in the upward trajectory of the Russell 2000. However, within the past three months, CFA has regained the lead as large-cap tech companies like Apple led the rise to record-breaking levels in August, which saw the S&P 500 officially become the longest bull market recorded.
“The nice thing about CFA is that it isn’t beholden to mega caps and large caps. It’s risk-weighted methodology seeks diversification across those 500 largest companies so performance isn’t dictated by one or two stocks or narrow segments of the market,” said Dhillon.
If the number of months are akin to a 12-round fight, then there are still three rounds left to determine the victor–can CSA out-quick CFA to a victory, or will the larger stocks of CFA eventually outpoint CSA?
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