Barclays today announced the launch of the Shiller Barclays CAPE US SMID Sector Index, expanding its index family to U.S. small and mid-cap equities. The new index is designed to provide systematic sector exposure with a value-oriented bias, targeting long-term value opportunities across market cycles. It incorporates momentum signals to help mitigate value traps.

The index utilizes the Cyclically Adjusted Price Earnings (CAPE) methodology developed by economist Professor Robert Shiller. U.S. small and mid-cap equities have historically exhibited distinct valuation and revenue characteristics compared with large cap stocks, including greater exposure to domestic economic activity. Investors are increasingly reassessing allocations beyond traditional large cap indexes in an environment of elevated market concentration and widening valuation dispersion.

Methodology and Structure

The Shiller Barclays CAPE US SMID Sector Index adapts the established sector framework previously applied across U.S. large cap, global, European and Japanese equity markets. It evaluates a defined set of U.S. SMID sectors using relative CAPE measures and momentum indicators. The index selects a subset of sectors and rebalances at regular intervals based on transparent, rules-based mechanics.

The index is built on custom MSCI USA SMID Sector Indexes developed by MSCI, which provide the underlying sector universe for the methodology.

Executive Commentary

Benedict Redmond, Managing Director, Head of EMEA QIS Structuring at Barclays, highlighted the opportunity in the mid and small cap area. "We are excited to see that our successful strategy, built together with Professor Shiller and team, can again provide investors a way to potentially outperform the wider market and be selective around what sectors they are exposed to," Redmond said.

Robert J. Shiller, Sterling Professor Emeritus of Economics at Yale University, emphasized the focus on innovation. "Much of the innovation that shapes the future economy begins in US smaller and mid-sized companies before it becomes widely recognized," Shiller stated. He added that careful attention to valuation using the CAPE Ratio may help investors gain exposure to parts of the American economy where entrepreneurial activity and long-term growth opportunities may exist.

Axel Kilian, Chief Client Officer at MSCI, noted the significance of the expansion. "We have invested significantly in creating and maintaining the long-dated sector data that makes this step possible," Kilian said. "We are proud that our custom MSCI USA SMID Sector Indexes provide the foundation for this launch."

Barclays has outperformed the market over the past 5 years by 10.73% on an annualized basis producing an average annual return of 22.51%. Currently, Barclays has a market capitalization of $91.95 billion.

If an investor had bought $100 of BCS stock 5 years ago, it would be worth $275.66 today based on a price of $27.23 for BCS at the time of writing.

Barclays’s Performance Over Last 5 Years

The following table details the performance metrics for Barclays over the specified period:

The key insight to take from this article is to note how much of a difference compounded returns can make in your cash growth over a period of time.