Capital Markets Summer 2020

VI

Smaller Capitalization Stocks Look Attractive Valuation

• Underperformance has compressed small cap valuations as compared to history

• Small caps underperformed YTD (through 6/30/20) but have historically outperformed in the 12 months following the trough of a recession*

I

II

Price-to-Earnings S&P Small Cap 600 / S&P 500

Small Caps Have Outperformed in Recoveries Performance One Year After Recession Trough

40%

38%

III

Large Caps More Attractive

20%

0%

22%

IV

Median

-20%

-40%

Small Caps More Attractive

V

-60%

S&P 500

Russell 2000

1994

1996

1998

2000

2002

2004

2006

2008

2010

2012

2014

2016

2018

2020

VI

Source: FactSet. P/E is price divided by earnings per share over last 12-months. *Based on S&P 500 vs. Russell 2000 performance after stock market troughs during the past three recessions: 12 months following 10/31/90, 9/30/01, 2/28/09, respectively. The performance data quoted represents past performance, which is not an indication or a guarantee of future results.

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