SMIDs cruise along
The global and Australian small/mid cap sectors have outperformed its broader equity counterparts over the last year.
According to FE Analytics, within the Australian core strategies universe, the global small mid/cap sector returned 36.58% over the year to 30 September, 2021.
The Australia small/mid cap sector returned 34.7%, followed by the broader Australian (31.23%) and global equities sector (27.03%).
In its global market commentary, the T. Rowe Price Australia Investment Committee, said: “We continue to favour value-oriented equities globally, US small caps, and emerging market stocks as we expect cyclically exposed companies to benefit from a supportive global growth profile, coupled with unleashed pent-up demand and inventory rebuilding as supply bottlenecks and COVID-19 concerns abate”.
Last July, Bell Asset Management chief investment officer, Ned Bell, said it was the perfect time to invest in global small/mid caps, despite the fact it “sounded counterintuitive” at the time. Then, in December, 2020, Bell said he expected the following two to three years to produce a “hockey stick shaped recovery”.
In its September global market outlook, Bell Asset Management said it remained optimistic that global earnings would grow strongly in 2022 and underpin a strong period of returns.
“We do however acknowledge that the aforementioned concerns are triggering some volatility in markets that we haven’t seen for some time,” the firm said.
“Opportunistically, we feel that the recent spike in volatility has and will continue to present us with buying opportunities in high quality names on our watchlist that have until now been too expensive. We suspect that management commentary in the upcoming Q3 earnings season will be a little more subdued than Q1 and Q2, as companies look to manage expectations for 2022.”
Performance of Australian and global equities over the 12 months to 30 September 2021
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