With the Russell 2000 trading at it's most attractive discount to the Russell 1000 in more than 20 years, professional investors are considering looking beyond the cyclical characteristics of U.S. smalls caps. Even as rates are on the rise and a recession may lie ahead.
This contrarian tactical view revolves around the contention that fear is preventing most investors adding to Small Caps (as supported by the current extreme levels of the VIX index) and the belief that the spread between large and small caps will follow the historical mean reversion path.
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