Mapping Size, Style and Sectors | 2016: Year of the Small Cap stock pickers

Market outlook: We maintain our bullish long term view while the US interest rate cycle will deliver short term volatility. As market optimism and risk appetite grows, we expect investors to step outside the consensus large cap and mid cap market and start to pick winners from the small cap universe to outperform the market. The large and mid cap stocks will become a crowded trade and force investors into small caps in order to deliver outperformance. Small cap outperformers will see substantial re-ratings higher as the market chases new market darlings. We carried out the analysis using equal weighted aggregates and indices to remove the bias to larger market capitalisation. Preferred Size, Style and Sector mix: Small Cap MITCH (i.e. Media, Information, Telco, Consumer and Health) stocks that deliver exposure to the new economy are the preferred Small Cap Industrials. For more breakdowns of the subsectors, please refer to the latest publication of “Equity Engineer”. (VIEW LINK)