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MARKET UPDATE

Small- & mid-cap opportunities: Thinking beyond the market downturn

By Chad Miller, CFA, Senior Portfolio Manager | 09/13/2022

09/13/2022

 

Chad Miller, CFA, discusses how small- and mid-cap stocks historically bounce-back after market downturns, along with his thoughts on the current economic environment and maintaining a long-term view.

Chad Miller, CFA
Senior Portfolio Manager

Video transcript

We believe small- and mid-sized companies certainly generate an attractive investment opportunity over the long term. Currently, the environment we find ourselves in is a downturn in the overall economy and, by effect, the equity markets. What we've seen is that small- and mid-cap companies have sold off more than their large-cap peers. But with a long-term context, we know that those small- and mid-sized companies are likely to be the ones that lead the recovery on the other side of the economic downturn. So, this downturn currently presents a unique opportunity to get invested in an attractive long-term asset class that can ultimately rebound and generate strong returns for clients.

Finding opportunities

Currently in the market, we see a number of companies whose shares have been extremely punished due to the overall weakening in the economy, as well as the change in interest rates. What that has meant is some of those small- or mid-sized companies that might have a longer duration to their valuation through ultimately being higher growth companies present pretty attractive opportunities.

Maintaining long-term discipline

At Thrivent, we have no way to predict what happens in the macro economy. Setting aside the macroeconomic outlook, we just use those as opportunities when they come about and knowing that, over the long term, we will return to some type of baseline growth. When we get those opportunities, we shouldn't be overly focused on the short-term concerns that are happening in the economy, but rather the long-term fundamental outlook for those individual companies so that we can invest in them and create strong returns for our clients over the next five to 10 years, not the next one or two quarters that are inherently unpredictable.

Past performance is not necessarily indicative of future results.

Mr. Miller is discussing the asset classes and portfolios he manages. The views expressed are as of August 25, 2022, may change as market or other conditions change, and may differ from views expressed by other Thrivent Asset Management, LLC associates. Actual investment decisions made by Thrivent Asset Management, LLC will not necessarily reflect the views expressed. The commentary should not be considered as investment advice or a recommendation of any particular security, strategy, or product.

The concepts in this presentation are intended for educational purposes only. They may not be suitable for your clients’ particular situation. The suitability of any specific product or strategy will be dependent upon your clients’ particular situation.

Small- and mid-cap stock risks: Small- and medium-sized companies often have greater price volatility, lower trading volume, and less liquidity than larger, more established companies.

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