Short-duration high yield can mitigate rate, credit, and equity risks
Short-duration HY bonds can help mitigate interest and credit risk while providing strong, less volatile, return potential than equities and broad HY bonds.
Steep discounts in SMID caps may signal strong future returns
- SMID (small to mid) caps, which typically trade at a valuation premium to large caps, are currently trading at their biggest relative valuation discount in more than 20 years.
- In the nine instances that SMID caps traded below their long-term relative P/E since 1998, they outperformed large caps by an average of 12% in the 12 months after reaching their valuation spread bottom.
SEE OTHER SPOTLIGHTS
SPOTLIGHT | On the Markets
Data illustrating current market conditions and trends—and what they mean for investors
High growth stocks on sale after recent sell-off
Lower prices from the recent sell-off may present good entry points for quality companies able to deliver consistently strong earnings growth.
Stronger returns likely to follow recent high yield bond declines
The recent high yield bond selloff may present an attractive buying opportunity and be a potential prelude to stronger returns in the 12 months to come.
Equity markets may see strong second-half rally after recent selloff
Nervous investors may want to sit tight, as equity markets could see a strong rebound in the second half of 2022.
Definition and Index: Russell 2500 Index (SMID caps) is unmanaged and measures the performance of the small-to-mid-cap segment of the U.S. equity universe. S&P 500 Index (large caps) is an unmanaged index of 500 common stocks of large U.S. companies, weighted by market capitalization. Indices are unmanaged and are provided for informational purposes only. Investors cannot directly invest in an index. Past performance does not guarantee future results.
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