Hi. This is Matt Brundage here at Bridgehouse, and I recently had a chance to speak with Mark Costa, Director of the Investments Group at Brandes Investment Partners. I asked for his thoughts on the sort of the general sentiment that, considering how well the Global Small Cap Equity Fund has been doing, perhaps it's too late to invest. Here's what Mark had to say.
Matt, I think it's a great question because whenever you have a strong performance period like this, I think the thing that would come to my mind, and I'm sure it comes to a lot of people on this call is, have we missed it? Have we missed the opportunity? Has the portfolio exhibited the the value creation already and maybe we should be patient? And I think my feedback would be that it continues to be a very target-rich environment for us. We're not standing still. We have an active approach.
Many of the ideas that we bought in COVID have worked out. And so that in part demonstrates that strong return that you see. But we're reallocating capital, all the time into new ideas. So I guess the question is, what does the opportunity set look like today? And are we able to reallocate capital into, ideas that will allow clients to generate strong wealth while also protecting and preserving capital? And I would say that that's definitely the case.
On the surface, you know, asset prices do seem rich, but that's been largely driven by a handful of large cap tech companies, they're driving a lot of the large-cap benchmarks to all-time highs. But if you look at the small-cap index there, over the last three years it's only been compounding at three or four percent return. You know, small caps have been out of favor for more than a decade.
And so that really gives us the opportunities to to allocate capital to some very, very interesting companies that are overlooked, we think, by the marketplace. If you go back over the last hundred years, I think portfolio management theory has been turned on its head because small caps have always today I mean, small-caps have always outperformed large caps, except for a few times. And I think you'd have to go back to the nifty fifty period.
And then again, in the pre dot com bubble era, those two periods, you did see small-caps underperform, but then that leadership position reverted back to small caps, for those that were patient and willing to sort of think differently than what other investors are doing. And so that's kind of what we're seeing. You can see here in this chart that the valuation dislocation, is at an extreme level between small caps and large caps.
And for an active stock picker poking around a very inefficient asset class, like Global Small Cap, it's an exciting time to be allocating capital. So we have more ideas that we, have cash to deploy. We're in our sweet spot when investors become cautious as well. And there's definitely a lot of concerns around the world They're allowing this dislocation to happen. And you think about wars in the Middle East.
You think about the continental war that's happening in in I mean, the war that's happening in continental Europe. We had a surprise election in Mexico that's giving us some very interesting opportunities. France just had one. We had an inflation shock. You know, there's concerns about the U.S. economy, and the impact that the inflation and low wage growth, has and maybe even horizon unemployment we have on U.S. consumers.
So, it that that really gives us those opportunities that we're looking for in in that sweet spot. I would say that we're definitely in one today.