Skip to main content

You are here

Blog Listing Page

Index IDEA: Highlights from the fourth annual FTSE Russell Small Cap Summit

After rising 14.2% in the period after the US presidential election through year-end, US small cap stocks as reflected by the Russell 2000® Index have come back to earth in 2017, with just a 1% rise year-to-date and a 1.3% decline in March as of March 28.

It was against this backdrop that a group of US small cap market experts - FTSE Russell senior index research director Tom Goodwin, CBOE Options Institute director of education Russell Rhoads, Jefferies & Co. SMID Cap Strategist Steven DeSanctis and ProShares Director of Investment Strategy Kieran Kirwan - met earlier this week for FTSE Russell’s fourth annual FTSE Russell Small Cap Summit.

Some highlights from the discussion:

On the Trump administration and slowing “Trump Bump:”

“The market appears to now be pricing in what Trump was going to do versus what he is actually able to do going forward.” Steven DeSanctis

“The way the situation for small caps is being described, it sounds like an obituary. I would describe it as more of a breather. Focusing on companies that have continually grown their dividends has been a strategy that has historically outperformed in the small cap market.  In particular, these companies tend to be quality companies with stable earning streams, strong fundamentals and a history of growth, making them a potentially compelling way to invest in this market.” Kieran Kirwan

On US small cap valuations:

“We are certainly seeing elevated valuations for US small caps relative to historical levels, with the price-to-earnings level for the Russell 2000 at about 28X.” Tom Goodwin

On possible US tax reform:

“The tax package really does matter for US small caps. I am worried about the impact to small caps should new legislation remove the deductibility of interest.” Steven DeSanctis

On US small cap market volatility:

“US small cap market volatility is currently at all-time lows, making me concerned about potential event risk. The only thing on the market’s radar right now is the French election.” Russell Rhoads

On the potential impact of an extended rise in US interest rates:

“Although every situation is different of course, FTSE Russell index research has shown that US small cap stocks have tended to perform positively over longer time frames during extended rate tightening periods.” Tom Goodwin

-----------------

© 2017 London Stock Exchange Group plc and its applicable group undertakings (the “LSE Group”). The LSE Group includes (1) FTSE International Limited (“FTSE”), (2) Frank Russell Company (“Russell”), (3) FTSE TMX Global Debt Capital Markets Inc. and FTSE TMX Global Debt Capital Markets Limited (together, “FTSE TMX”) and (4) MTSNext Limited (“MTSNext”). All rights reserved.

FTSE Russell® is a trading name of FTSE, Russell, FTSE TMX and MTS Next Limited. “FTSE®”, “Russell®”, “FTSE Russell®” “MTS®”, “FTSE TMX®”, “FTSE4Good®” and “ICB®” and all other trademarks and service marks used herein (whether registered or unregistered) are trade marks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, MTSNext, or FTSE TMX.

All information is provided for information purposes only. Every effort is made to ensure that all information given in this publication is accurate, but no responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for any errors or for any loss from use of this publication or any of the information or data contained herein.

Views expressed by Kieran Kirwan of ProShares, Steven DeSanctis of Jefferies & Co, Russell Rhoads of CBOE and Tom Goodwin of FTSE Russell are as of March 31st and subject to change. These views do not necessarily reflect the opinion of FTSE Russell or the LSE Group.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the results to be obtained from the use of the Russell US Indexes or the fitness or suitability of the indexes for any particular purpose to which they might be put.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing in this IDEA should be taken as constituting financial or investment advice. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any representation regarding the advisability of investing in any asset. A decision to invest in any such asset should not be made in reliance on any information herein. Indexes cannot be invested in directly. Inclusion of an asset in an index is not a recommendation to buy, sell or hold that asset. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.

No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group index data and the use of their data to create financial products require a licence from FTSE, Russell, FTSE TMX, MTSNext and/or their respective licensors.

Past performance is no guarantee of future results. Index returns shown may not represent the results of the actual trading of investable assets.

This publication may contain forward-looking statements. These are based upon a number of assumptions concerning future conditions that ultimately may prove to be inaccurate. Such forward-looking statements are subject to risks and uncertainties and may be affected by various factors that may cause actual results to differ materially from those in the forward-looking statements. Any forward-looking statements speak only as of the date they are made and no member of the LSE Group nor their licensors assume any duty to and do not undertake to update forward-looking statements.

Blog Listing Page