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Year-end playbook: Mighty Small Caps or Large Cap Leaders?

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These last few weeks have been some of the most telling in domestic and international markets.

As today marks the first full day of fall, we couldn't help but question what year-end playbooks investors should be looking at.

Craig Hodges, Portfolio Manager of the Hodges Small Cap Fund finds value in the smaller players of the market. With names like KapStone Paper & Packaging, JC Penney, and American Airlines, Hodges sees lots of opportunities in the volatility of these markets. "Short term prospects of the market are mixed, but we are looking at stocks long-term and believe the stocks we are excited about now will prove to be great buys months from now."

Hodges also notes that "since the Fed's decision, the market has been acting poorly." He believes that investors have pulled away and won't return until the Fed takes action.

Burns McKinney, Portfolio Manager of AllianzGI NFJ Large Cap Value Fund, feels quite the opposite. McKinney sees more opportunity in the larger companies when considering the Fed's "dove hold" and emerging markets. He believes small caps "face greater challenges going forward in the form of being more susceptible to rising rates or to recession since they tend to have more leveraged balance sheets."

The NFJ Large Cap Value Fund has been adding a lot of financials to their portfolios. "The sector benefits from rising interest rates; that's why it has sold off recently as the odds of sooner Fed lift off have been pushed back a little. However, that's the time to buy, when the odds priced in are the lowest."

Other top picks from McKinney include: Travelers, IBM, and Procter & Gamble.