Small caps have lagged the broader market every year since 2022.

With tech and growth stocks among the most overvalued in US markets, Morningstar’s Sekera advocates for an overweight position in value stocks, which are trading at a roughly 7% discount to our estimate of the category’s fair value. He recommends underweighting the growth category, which is trading at a 16% premium.

Small-cap stocks still look undervalued, as do pockets of international markets