Most of my portfolio is etf/index funds like SPY (Sp500), QQQ (Nasdaq 100), then individual stock holdings of Mag 7, NVDA, and then a few highly speculative investments.
As a result my portfolio is very concentrated into mega-cap stocks but I’ve noticed that is where most of the markets growth has been in the past year or so, I’m still planning to buy more SPY to diversify and gain more exposure to large cap but I’m wondering what the benefit is to owning small-cap, mid-cap ETFs/indexs?
I heard from somewhere that high interest rates affected small cap more disproportionately, and rate cuts are going to be beneficial. I’m still not convinced because mega cap/mag7 are the main companies showing growth in profitability and strong FCF, debt ratios, and cash holdings which is what value investing mostly boils down to, small-mid cap firms aren’t able to match this and resultantly their historic performance hasn’t been on par with mega cap. I’m just wondering is it really worth having exposure to mid-cap, small-cap etc?
