Where now for US small caps?

Wells Fargo's Garth Nisbet

clock • 2 min read

The small-cap investment sector has captured a spotlight since the surprise election of US President Donald Trump - businessman, outsider and entertainer. However, long before the election of the 45th President of the United States, small caps were quietly and steadily making their mark.

The 2016 US Presidential Election advanced a fresh catalyst for small caps: the pro-growth platform of President Trump. Corporate tax reform is a key policy feature: smaller firms have fewer options to limit taxes via offshore transactions. Moreover, there is impetus toward a relaxed regulatory environment. For example, the Federal Reserve favours adjusting financial regulations so they are less burdensome on small banks.  The current climate offers a number of reasons to invest in smaller firms. Small caps may be the last active manager frontier, and neglected companies provide a uni...

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