Janus Henderson makes the case that smaller companies may be entering a more favorable phase after years of lagging mega-cap leadership.
- Small caps offer broader diversification across regions, sectors and business models, with lower index concentration and greater exposure to domestic economic activity.
- Structural tailwinds include M&A demand, limited analyst coverage and supply-chain realignment, all of which can create opportunities for active investors.
- Valuations remain notably discounted versus large caps, suggesting even a modest broadening in market leadership could unlock upside.
If equity leadership begins to rotate away from a narrow group of large-cap winners, small caps may move from neglected to necessary.
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