Pension fund investment committees should, in our view, consider rebalancing existing allocations from areas of the market that have significantly outperformed over the past decade and into areas that have significantly underperformed. Taking advantage of the purchasing power afforded by U.S. dollar strength, rotating to non-U.S. small-cap equities is one strategy to diversify, and likely improve overall risk-adjusted returns, when compared to traditional non-U.S. large-cap equity exposure.
