The Russell 2000 (^RUT), which tracks small-cap stocks, has lagged the broader S&P 500 (^GSPC) index over the last 12 months.
Goldman Sachs Asset Management Portfolio Manager Greg Tuorto argues there are reasons to like small caps, such as potential IPO and M&A activity, earnings season, and some "unique thematic trends" in sectors such as retail and restaurants.
Overall Tuorto says small caps are "a very domestic asset class, very much driven directly by what’s going on in the US economy. So the strength in the US economy should not be discounted in small caps."
Watch the video above to hear Tuorto explain why investing in small caps based on the benchmark indexes, like the Russell 2000, may not be the best way to go.
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