At the end of July 2021 we can say that the economic recovery has had a favorable effect on financial markets. The S&P 500 and the MSCI World are up 17.5% and 14.38% respectively. In general terms, the forecasts are good for the second semester of the year according to the consensus, since economic indicators continue to rise and monetary and fiscal policies do not seem to show signs of retreat in the short term.
In this context, we see that small caps have lagged behind. So far this year, the Russell 1000 index (the thousand largest companies in America) has gained 14%, while the Russell 2000 (the two thousand with the smallest capitalization) has barely achieved 1.8%.
Investors have paid less attention to this riskier sector, and we note that the premium being paid by larger companies is the highest in 20 years. Taking into account that small companies tend to be more sensitive to the economic cycle, we believe that the Small Cap segment may be one of the best performers in 2H 2021.