A money manager expects small-cap stocks to outperform by 2027. Brandon Nelson of Calamos Investments holds that view. His four-star fund focuses on financial services applications.
Small-cap companies have lagged larger peers for years. Nelson believes this trend will reverse. He points to cheaper valuations and stronger earnings potential.
The fund manager favors two specific picks in the financial technology space. Both companies provide software for banking and payments. They serve small and midsize businesses.
One pick offers digital lending tools. The other specializes in payment processing. Both have steady revenue growth and low debt.
Nelson argues small caps will benefit from interest rate cuts. Lower borrowing costs help smaller firms more than large ones. This could spark a rally through 2027.
The fund has returned 12% annually over five years. That beats the Russell 2000 index. Nelson’s approach blends value and growth factors.
Investors should note small-cap stocks carry higher risk. They trade less frequently and react sharply to economic shifts. Nelson recommends a long-term horizon for these picks.
