Donald Trump’s return to the White House has sent markets (^DJI, ^IXIC, ^GSPC) surging, particularly small-cap (^RUT) stocks. Royce Investment Partner co-chief investment officer Francis Gannon joins Wealth to discuss the implications for the small-cap sector. Gannon notes that the investment thesis for small-caps remains largely unchanged from before the election. He points out that the small-cap index has delivered a negative 1% return over the past 3 years, with the index’s peak occurring 3 years ago on Nov. 8. However, Gannon believes that Trump’s victory, coupled with a favorable earnings season, will provide a significant boost to the small-cap index, which he describes as a “revolution” going forward. “I think part of the small-cap story is that many of the trends in place yesterday, even before the election, are going to continue,” he states. Gannon advises investors to focus on more economically sensitive areas of the market, such as industrials and materials. He expects an “American-focused opportunity” to emerge in the small-cap space over the next several years under the new administration. To watch more expert insights and analysis on the latest market action, check out more Wealth here.
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