IJT - Focus on fundamentals should boost small mid-cap stocks in 2021: Janus Henderson

While the S&P 500 gained 18% in 2020 even with the pressures of the pandemic, most of the gains came from a handful of humongous tech companies.You recognize the names — Apple, Microsoft, Amazon, Nvidia — that have dominated the stock movers headlines.But as COVID-19 vaccines roll out, the market should continue to broaden as investors shift their focus on company fundamentals, writes Janus Henderson portfolio manager Jonathan Coleman.Specifically, he sees optimism for small and mid-cap equities in 2021 because the disconnect between stock performance and company fundamentals that occurred in 2020 isn't sustainable, Coleman contends.During 2020, the stocks of money-losing companies outperformed the stocks of those that made money by a ratio of two to one, with a similar dynamic occurring in mid-cap stocks, he said.Part of that resulted from investors focusing on stocks that they believed might benefit from the pandemic, even if they continued to lose money.

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Focus on fundamentals should boost small, mid-cap stocks in 2021: Janus Henderson