Small Caps Are Beating the S&P 500 by the Widest Margin Since 2003. Here's How to Invest.
Small caps have been much cheaper than large caps for a long time, but are starting to catch up.
Overview
To say that small-cap stocks haven't been a great investment for the past several years would be an understatement. The S&P 500 has been carried to all-time highs by the Magnificent Seven, while the Russell 2000 small-cap index has dramatically underperformed. In fact, over the 10-year period through the end of 2025, the S&P 500 produced a 323% total return -- that's about 120 percentage points more than the Russell 2000.
Now that we're halfway through 2026, it seems like the tide might be turning. The Russell 2000 has surged by more than 20% this year, its best first-half performance since 1991. And it isn't lagging the S&P. In fact, the last time small-cap stocks were outperforming the S&P 500 by this much halfway through a year was way back in 2003.
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Originally published at www.fool.com.