Big opportunities in international small-caps

The global pandemic changed the world, but it is leaving opportunity in its wake. As investors rethink their portfolios, we believe now is the time to take advantage of these opportunities across the globe – particularly in small cap companies. While it is premature to know the timing and extent of the recovery, international small-caps have historically performed well relative to US Large-caps emerging from historical worldwide recessions and bear markets, illustrated below

International small-cap versus US large-cap performance during economic and bear market recoveries

Sources: Macquarie Investment, Morningstar; Past performance does not guarantee future results.

What this means for investors

While international small-caps should always play an important role in a long-term asset allocation strategy, now may be a good time to revisit your exposure to the asset class.

Investing involves risk, including the possible loss of principal.

Past performance does not guarantee future results.

Nothing presented should be construed as a recommendation to purchase or sell any security or follow any investment technique or strategy.

The views expressed represent the investment team’s assessment of the market environment as of June 23, 2021, and should not be considered a recommendation to buy, hold, or sell any security, and should not be relied on as research or investment advice. Views are subject to change without notice.

Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.

Market risk is the risk that all or a majority of the securities in a certain market – like the stock market or bond market – will decline in value because of factors such as adverse political or economic conditions, future expectations, investor confidence, or heavy institutional selling.

International investments entail risks including fluctuation in currency values, differences in accounting principles, or economic or political instability in other nations.

Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged and one cannot invest directly in an index.

The MSCI EAFE (Europe, Australasia, Far East) Small Cap Index represents small-cap stocks across developed market countries around the world, excluding the United States and Canada. The index covers approximately 14% of the free float-adjusted market capitalization in each country.

Index “net” return approximates the minimum possible dividend reinvestment, after deduction of withholding tax at the highest possible rate.

The Russell 1000 Index measures the performance of the large-cap segment of the US equity universe. The Russell 1000 Index is a subset of the Russell 3000 Index and includes approximately 1,000 of the largest securities based on a combination of their market capitalization and current index membership.

The S&P 500 Index measures the performance of 500 mostly large-cap stocks weighted by market value and is often used to represent performance of the US stock market.

Frank Russell Company is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company.

Charts shown throughout are for illustrative purposes only and not meant to predict actual results.

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Chart is for illustrative purposes and is not representative of the performance of any specific investment.

Macquarie Asst Management (MAM) is the asset management division of Macquarie Group. MAM, through its affiliates, operates as a full-service asset manager offering a diverse rage of products.

Macquarie Investment Management (MIM) is the marketing name for certain companies comprising the asset management division of Macquarie Group. Investment products and advisory services are distributed and offered by and referred through affiliates which include Delaware Distributors, L.P., a registered broker/ dealer and member of the Financial Industry Regulatory Authority (FINRA) and Macquarie Investment Management Business Trust (MIMBT), a Securities and Exchange Commission (SEC)-registered investment advisor. Investment advisory services are provided by a series of MIMBT. Macquarie Group refers to Macquarie Group Limited and its subsidiaries and affiliates worldwide. Delaware Funds by Macquarie refers to certain investment solutions that MIM distributes, offers, refers, or advises.

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