- Valuations are "very elevated" for large-cap stocks, but there is "great value" to be found in small caps, Goldman's Katie Koch told CNBC.
- "It's pretty clear from a corporate perspective that small caps are set to benefit the most" from the Republican tax reform plan, she said.
- Koch also sees opportunity in both developed and emerging markets.
Valuations are "very elevated" for large-cap stocks, but there is "great value" to be found in small caps, Katie Koch of Goldman Sachs Asset Management told CNBC on Thursday.
The proposal, unveiled Wednesday, calls for a reduction in the corporate tax rate to 20 percent from 35 percent.
Companies in the small-cap Russell 2000 pay a median effective tax rate of 31.9 percent, while the larger, multinational companies in the pay a median effective tax rate of 28 percent, according to Thomson Reuters data. The median for the 30 mega-cap stocks in the Dow Jones industrial average is just 23.8 percent.
The Russell 2000 hit an all-time high of 1,489.35 and closed at a record 1,488.79 on Thursday. The Dow ended 40 points higher, and the S&P 500 gained 3 points to a record close of 2,510.06.
Koch, who is global head of client portfolio management and business strategy at Goldman, also advises her clients to look outside the United States for opportunity in both developed and emerging markets.
However, Paul Hickey, co-founder of Bespoke Investment Group, told "Closing Bell," that it is hard to tell people to fight such a strong U.S. market.
"Investors are far from complacent," he said. "Investor sentiment polls are still showing a skittishness toward the market."
He expects the fourth quarter to be strong.
"The market's rallied in spite of Washington all year and I think there's been zero chance of tax reform priced into the market up until the last couple of days," Hickey said. "If we do start to see some tax reform make headway … that could only be taken as a positive for the market."
— CNBC's Evelyn Cheng and Reuters contributed to this report.