US small and mid cap equities remain attractively valued on an historical basis, despite sharp gains since March, says T. Rowe Price’s David Wagner.
The firm's US small- and mid-cap equity strategy portfolio manager says they also remain attractively valued against other asset classes.
"With the flexibility of a broad range of investments, across a large opportunity set, the asset class offers opportunities to achieve future capital gains," says Wagner.
He also says all the long term- fundamental reasons for investing remain intact.
"With historical evidence of the outperformance of the asset class when an inflection point in the economy has been reached, we believe these distinctive characteristics offer a compelling risk/return profile for investors."
Wagner says while prospects differ across sectors and industries, a bottom-up approach to investment allows to identification of the strongest opportunities in each area.
With financial markets still undergoing a difficult adjustment, Wagner says, in the medium to long term there will be opportunities for investors to benefit from valuation anomalies.
"For those investors who are underweight the asset class or have no exposure at all, we believe this represents an attractive opportunity to add to the asset class," Wagner adds.
"Yet in the short term, staggering investments over the remainder of the year may prove to be the most prudent approach, as investors may have an opportunity to add at lower levels."
