• Mid- and small-cap U.S. equities represent a significant piece of the global market, but they are overlooked by many international investors, particularly in Europe.
• Historically, the S&P MidCap 400® and S&P SmallCap 600® have outperformed many global equity markets. However, the performance of many active funds investing in mid- and small-cap U.S. equities has been disappointing.
• With index-linked vehicles such as exchange-traded funds (ETFs) arising in recent years to offer low-cost, passive exposures to mid and small caps, global investors may find it timely to consider a passive allocation.
• We examine the benefits of exploring the U.S. equities market beyond large caps from a European investor’s perspective and with a focus on S&P Dow Jones Indices’ S&P MidCap 400 and S&P SmallCap 600.