Where are the opportunities in US small caps?

Helped by strengthening US dollar

With profits looking relatively robust, and the future direction of travel for profits also looking encouraging, we continue to believe US equities can deliver positive returns, writes Don San Jose, manager of the JP Morgan US Smaller Companies investment trust.

Moreover, the US economy is in reasonably good shape and, from a valuation perspective, comparative values between equities and bonds remain favourable for equities as an asset class. While US equities ended 2016 near all-time highs, it is also notable US small caps have rallied since the US presidential election.  Many investors believe this particular segment of the market is well-placed to benefit from the President-Elect's pro-growth, pro-business policies. This is a sentiment we also share.  Small caps tend to have more sensitivity to the US economy and a higher-median tax rat...