US small cap equity perspectives in 2020

Although all US equity asset classes enjoyed strong performance in 2019, US large caps outperformed small caps. Large caps have benefited from macro tailwinds including fears of slowing global growth and endless US-China trade uncertainty. Both factors have pushed investors towards higher quality blue chips with more dependable growth than their more economically sensitive small cap counterparts. Growth worries have also driven interest rates to record lows, boosting large cap and growth indexes that have less exposure to financials, a sector whose margins are pressured by falling rates. But there may be reason to expect better performance from small cap stocks in 2020. While global leading economic indicators are at their weakest since the financial crisis, they’re beginning to exceed low expectations and are at levels consistent with prior positive inflections. Not surprisingly, small caps have begun to recently outperform. If a US-China phase 1 trade deal proves forthcoming and a re-escalation in tensions can be avoided, it’s likely optimism on global growth will improve, helping more economically sensitive assets like small caps do better. But it is no question that we see more market volatility impacting small caps in 2020 with global geopolitical concerns and the US general election top-of-mind. New futures tools can help retail investors mine US small-cap equity opportunities while addressing market volatility. Join experts from FTSE Russell and CME Group as they discuss the outlook for US small cap equity and ways for investors to access and hedge exposure. *** Please note that this webinar is exclusively addressed at investors in the USA and/or jurisdictions where CME Group's products and services are approved for distribution. ***