Small & Mid-Cap Equities: Small-cap effects

“We believe that ultimately the most deserving business models will again attract capital at the expense of the less deserving ones.” In IPE, Neuberger Berman’s Gregory Spiegel discusses the importance of active management in US small caps, as the small-cap market is typically heavily influenced by money flows into passive indexes as opposed to company fundamentals. Spiegel warns of trying to time a transition back to higher-quality investments, as shifts, often triggered by changes to monetary policy, can be sudden and intense.