Of the 30 stocks on the Dow, 23 have hit 52-week highs this year.
Noah Blackstein, vice president and portfolio manager of Dynamic Funds, is not betting they’ll catch up.
For a lot of the companies, “there really are fundamental reasons which are driving their underperformance,” he told CNBC’s “Power Lunch” on Monday.
Instead, he has his eye on small- and mid-cap stocks.
“As the U.S. economy continues to pick up steam and interest rates move higher, the smaller caps and the mid-caps are going to start to gain on the larger-cap companies,” Blackstein said.
However, Allianz Global Investors’ Kristina Hooper believes the avoidance of large-cap stocks is unfortunate because they can offer good dividends.
“If investors have a long enough time horizon, they should have adequate exposure to large caps,” she said.
“It looks like small caps will continue to outperform this year and that’s largely because of the monetary policy backdrop but at a certain point that will go away. The Fed will become less accommodative and the investing landscape may return to a more normal environment,” she added.
Hooper likes financials, oil producers and selective tech names, calling them “attractively valued.”
—By CNBC’s Michelle Fox. CNBC’s Jennet Chin contributed to this report.
Disclosure: Noah Blackstein owns Salesforce.com and Biogen Idec in his portfolio.