Insight
Uncovering Opportunity in SMID-Cap Equities
SMID-cap stocks offer a compelling combination of attractive valuations, cyclical and secular tailwinds, and a means to diversify portfolio concentration. Taking an active approach can uncover hidden opportunities, manage risk, and drive long-term growth.
12/5/2025
9 min read
Topic
ETFs
Key takeaways
- SMID-cap opportunity: U.S. small- and mid-cap (SMID-cap) stocks are trading at historically steep discounts to U.S. large caps, presenting a compelling entry point for investors seeking to rebalance portfolios, reduce concentration risk, and enhance growth potential.
- Cyclical and secular tailwinds: Factors like interest rate cuts leading to lower borrowing costs, reshoring trends, artificial intelligence (AI) efficiencies, merger and acquisition (M&A) activity, and market rotation away from overvalued mega caps favor SMID-cap equities in the current economic environment.
- Active management advantage: The inefficiencies and limited coverage in the SMID-cap space make active management critical for uncovering hidden opportunities, managing risk, and driving long-term outperformance.
Related insights
Molly Landes is head of ETF Capital Markets for Allspring, leading strategic relationships with key trading partners and overseeing the quality and efficiency of our ETF trading business.