Is a Small-Cap ETF the Best Investment of 2026? Here's What the Data Suggests.
Small caps just had their best first half since 1991.
Overview
Amid the dominance of artificial intelligence (AI) stocks and the "Magnificent Seven" of the past few years, many investors have overlooked the strong performance of small-cap stocks.
The Russell 2000 index, which tracks the small-cap universe, is up 20% year to date, having outperformed the S&P 500 index, the Nasdaq Stock Market, the S&P 400 mid-cap index, and the Russell 1000 index. The outperformance extends over the past 12 months, as the Russell 2000 has returned 35%. The Nasdaq has returned 27%, while the S&P 500 is up 20% over that same stretch.
Details
There are a few reasons for the small-cap surge, and a big one is a rotation out of overvalued large-caps. With large-cap valuations hovering at historically high levels, investors have sought out less expensive stocks.
Source
Originally published at www.fool.com.