The strong dollar is suppressing large-cap stocks while private equity players are bidding up small-caps leaving mid-caps as the best of the bunch, said Dan Hughes, Client Portfolio Manager at Vaughan Nelson. Hughes added that the mid-cap space has traditionally offered a higher risk/return profile than the small-cap universe due to having higher quality companies. Furthermore, he said better companies have recently been entering the public markets as mid-caps. As for sectors, Hughes likes select healthcare and technology names, but is neutral on energy despite the recent comeback in the price of oil.
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