Small-Cap Value Stocks Lag Despite Bull Market, But Could Present Buying Opportunity
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A bull market is underway, with the S&P 500 reaching new highs. However, small-cap value stocks have lagged behind large caps recently.
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The SPDR S&P 600 Small Cap Value ETF (SLYV) provides exposure to undervalued small caps that have profitability requirements. Historically, small-cap value has outperformed with a 14.1% annualized return.
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Small caps carry higher risk than large caps, especially amid rising rates. But SLYV spreads risk over 459 constituents.
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Investing $100 per month in SLYV over 40 years could compound to $1.7 million, assuming 14.1% average annual returns. But returns may differ significantly.
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Small-cap value looks relatively undervalued now compared to the S&P 500. This could present a buying opportunity if the valuation gap eventually narrows.