Look Beyond U.S. Large-Cap Equities


Global growth is steady and improving in key areas outside of the United States.

The global economy continues to strengthen, as many countries and regions have shown improvement. For instance, the European recovery appears to be well on track—supported by a wide range of indicators. We expect this should lead to above average growth for the remainder of this year and next—the effects of which should begin to flow through to profit growth and capital flows.

Growth and Business Indicators Are Positive in the Euro Region1

Euro-area growth has accelerated significantly—marking one of the biggest surprises this year.

Additionally, during periods of rising interest rates, as displayed in the chart below, small-cap stocks have historically performed better than large-cap stocks—making them an asset class worth considering during times like these. And, we believe small-cap stocks may still benefit from the Trump reflation trade.

Small-Cap Stocks Outperformed Large Caps during Rising Rate Periods Where the 10-Year Treasury Yield Rose by More than 100 Basis Points2

U.S. small-cap stocks have historically benefitted when the U.S. economy has shown signs of increasing strength.When looking to diversify an existing equity portfolio, investors may want to consider strategies that provide exposure to small caps and assets outside of the U.S., if suitable.

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1. Sources: Thomson Reuters Datastream, New York Life Investments, 6/30/17. Past performance is no guarantee of future results.1. Sources: Thomson Reuters Datastream, New York Life Investments, 6/30/17. Past performance is no guarantee of future results.

2. Source: Morningstar, 6/30/17. U.S. Large Caps are represented by the S&P 500 Index. U.S. Small Caps are represented by the Russell 2000 Index. Past performance is no guarantee of future results. It is not possible to invest directly in an index. Index definitions can be found at the end of this seminar.

3. Sources: Ned Davis Research, Compustat, New York Life Investments, 6/30/17. Past performance is no guarantee of future results.

All investments are subject to market risk, including possible loss of principal. Diversification cannot assure a profit or protect against a loss in a declining market.

The information and opinions contained herein are for general information use only. MainStay Investments does not guarantee their accuracy or completeness, nor does MainStay Investments assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, and are not intended as an offer or solicitation with respect to the purchase or sales of any security or as personalized investment advice. There can be no guarantee that any projection, forecast, or opinion in these materials will be realized. Past performance is no guarantee of future results.

Large cap (sometimes “big cap”) refers to a company with a market capitalization value of more than $5 billion. Large cap is a shortened version of the term “large market capitalization.” Market capitalization is calculated by multiplying the number of a company’s shares outstanding by its stock price per share. The dollar amounts used for the classifications “large cap,” mid cap” or “small cap” are only approximations that change over time.

Small cap is a term used to classify companies with a relatively small market capitalization. A company’s market capitalization is the market value of its outstanding shares.

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SAS Group

Strategic Asset Allocation & Solutions Group, New York Life Investment Management

NYLIM’s Strategic Asset Allocation & Solutions (SAS) Group invests tactically across the full span of global capital markets, designing comprehensive solutions for a variety of client needs. Managed assets include MainStay Asset Allocation and Retirement Funds, mandates for third parties, and a customized strategy for the New York Life General Account.

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