It’s always challenging to understand “why” and no way to prove theories - but we here at O’Reilly Wealth Advisors have been enjoying a surge of the U.S. Small Cap stocks as represented by the Russell 2000 compared to the U.S. Large Cap as represented by the S&P500 index.
Our clients enjoy a “tilt” towards small cap. For example, if small caps represent 20% based on market value weight, our clients are slightly overweight - say around 25%.
In the image above you see how 3 months ago, the small cap broke away from the large cap - up about 38% while the large cap was up about 11%. 11% in 3 months is awesome - 38% is a rocket. Small caps have been out of favor for a long time. This is not surprising. Keep in mind outperformance can also happen on the way down too. If large caps go down 15% and small caps go down 5% during the same time - then small caps outperformed by 10% during that time.