economy
Small caps put on their best monthly showing since 2020. Bank of America says there's more upside ahead
The Russell 2000 surged in April. Bank of America highlights ETFs to play small caps and enhance returns.
TL;DR
- The Russell 2000 index saw its best monthly performance since November 2020, rising over 12% in April.
- Bank of America strategists expect small caps to continue outperforming large caps due to an EPS and manufacturing recovery.
- Opportunities exist in active management and thematic small-cap ETFs beyond the Russell 2000 benchmark.
- Highlighted ETFs include SMLF for profitable companies, JSML for high earnings estimate revisions, and AVDV for international diversification.
- Financial planners suggest a 5% to 10% allocation to small caps for diversification, emphasizing the need for discerning investment in this inefficient asset class.