Alger Insights that Helped Our Clients Navigate the 2020 Storm

ALGER INSIGHTS 2/4

Featured Content Alger Breaking Views , Going on the Offense with Small Caps – Released April 2, 2020 Alger On the Money , Small Caps for the Recovery – Released May 13, 2020 • In April, our analysis concluded that small cap stocks have historically led market rallies following recessions. • Though small caps had dramatically underperformed year to date as investors sought the relative safety and liquidity of large caps, we believed that their depressed valuations made them potentially attractive. • Since May, the Russell 2000 Index outperformed the S&P 500 by 10% through November. Featured Content Alger Breaking Views , Is Growth Investing Healthier than Value? – Released March 23, 2020 Alger On the Money , Why Growth Now? – Released April 1, 2020 • As pioneers of growth equity investing, Alger has long believed in the power of growth as a long-term performance driver. • In March, we argued that growth could potentially – Companies with predominantly physical assets, such as manufacturing plants, would be hurt more by economic contraction than businesses with intangible assets, such as digital technology. – Accounting issues in classification of value stocks, including the treatment of intangible assets in determining price to book ratios. – Growth companies had stronger balance sheets. • Since April, the Russell 3000 Growth Index has outperformed the Russell 3000 Value Index by 15%, through November. outperform for the following reasons: – Growth is less cyclical than value. – Declining interest rates hurt value.

Small Caps Have Outperformed in Recoveries

38%

22%

S&P 500

Russell 2000

Source: FactSet and Alger. S&P 500 vs. Russell 2000 average performance over past three recession troughs: 12 months following 10/31/90, 9/30/01, 2/28/09, respectively.

Growth vs. Value Relative to S&P 500

110

Russell 1000 Growth Russell 1000 Value

105

100

S&P 500 Index

95

90

85

80

Dec 2019

Jan 2020

Feb 2020

Mar 2020

Source: FactSet as of 3/26/20.

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