Cash in on the potential of US small-cap stocks with this investment trust

There is ample scope for the American market’s small-cap stocks to close the valuation gap with blue chips. Max King picks an investment trust perfectly poised to profit.

The trebling of the S&P 500 index in the last ten years has left the US market accounting for 57% of the MSCI All Countries World index. Much of this outperformance is justified by strong domestic growth, international expansion, rising margins, lower taxes and, above all, America’s record of innovation – but, arguably, not all of it. The earnings multiple of the World index, based on forecast earnings for 2021, stands at nearly 20 but that of the S&P 500 is at 22.5, the highest since 2001. The rest of the world averages out at 16.

Value in the wider market

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.