Our guest today makes the argument for why mid-caps as an asset class belong in a properly diversified defined contribution plan investment menu and explains why most 401(k) participants are probably not aware of just how overly exposed they are right now to just a handful of the biggest companies.
Here to explain it all is Invesco’s Justin Livengood, CFA, who is the Senior Portfolio Manager for Invesco’s mid-cap growth and healthcare strategies, and Senior Research Analyst for the Discovery and Capital Appreciation strategies, where he covers the health care, financial services, and real estate sectors.
He covers why mid-caps are an incrementally good way to help retirement plan participants pursue an optimal level of diversification, why he believes active management is preferable to passive in mid-caps, and provides a high-level view of what’s happening in the macro environment right now as well as the near-term outlook.
For Institutional Investor Use Only – Not for Use with the Public
The opinions expressed are those of the author as of May 25, 2023. These comments should not be construed as recommendations, but as an illustration of broader themes. Forward-looking statements are not guarantees of future results. They involve risks, uncertainties, and assumptions; there can be no assurance that actual results will not differ materially from expectations.
All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in an investment making decision. As with all investments there are associated inherent risks. Consider the investment objectives, risks, charges, and expenses carefully before investing. Please read all financial material carefully before investing. For this and more complete information about the strategy, contact your Invesco representative.
Past performance is not indicative of future results.
This portfolio is actively managed. Portfolio holdings and characteristics are subject to change. This does not constitute a recommendation of the suitability of any investment strategy for a particular investor. The opinions expressed herein are based on current market conditions and are subject to change without notice.
Diversification does not guarantee a profit or eliminate the risk of loss.
Mid-caps have shown better risk-adjusted returns than large or small caps since the Russell Midcap Index inception on 11/1/91 through 12/31/22. During this time period, total returns for small, mid, and large cap stocks have been 8.98%, 10.86% and 9.84% respectively. Standard deviation of returns was 19.33, 16.58 and 15.10 respectively. And Sharpe ratios were .42, .56 and .54 respectively.
Mid-caps are represented by the Russell Midcap Index, large caps are represented by the Russell 1000 Index, and small caps are represented by the Russell 2000 Index. An investment cannot be made in an index.
The Russell Indexes are a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co.
Invesco Advisers, Inc. is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities.
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