GOLDMAN SACHS: Small-cap stocks will outperform the S&P 500 over the next year and deliver 14% returns. Here's how to seize the upside.
But the reign of large-caps could be over, says Goldman Sachs. Large-cap stocks' reign of dominance may soon be over, according to research fromThe investment bank's strategists said in a note on Tuesday that they expect the Russell 2000 Index — which is viewed as a benchmark for small-cap performance — to return 14% over the next 12 months. That beats the bank's expectations for the large-cap S&P 500 Index, which it sees delivering 9% returns to investors in the next year.
"Our economists expect that US GDP will average 1.4% during the next 12 months. However, our economists' forecast is more optimistic than the consensus view. This represents one downside risk to the model's implied Russell 2000 return," the note's lead author Lily Calcagnini, wrote."If consensus GDP forecasts were realized and the economy were to grow by roughly 0.
And then there's the index's exposure to areas of the market that usually perform weaker in environments like the current one. These include pharma biotech & life sciences, banks, and real estate, Goldman said.
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