Since the market’s low on March 9, small-cap value stocks have delivered some of the best performance, but experts believe the pendulum is swinging back in the direction of large-cap growth stocks, The Wall Street Journal reports.
Year-to-date through Oct. 28, small-value mutual funds are up an average of 74%, whereas small-cap growth funds are up 58% and large-cap growth funds are up 52%, according to Morningstar.
True to other market downturns, when the economy turned south at the end of 2007, investors began to bail out of small-cap value stocks, for fear that they might go bankrupt. The ensuing beaten-down prices made these stocks some of the most attractive when the market began its reversal this past spring.
Growth stocks traditionally lead the second wave of a rebound, but especially with the recovery looking so choppy and more companies looking to expand their business into emerging markets, the larger, higher-quality, better equipped companies look even more appealing and are likely to see their stocks begin gaining steam. In addition, with jobs being so scarce, it’s more than likely that companies will invest more in technology to realize even greater efficiencies, and experts are also touting these stocks.