Why investors are turning to America’s underdogs

Why investors are turning to America’s underdogs

Why investors are turning to America’s underdogs For years, small-cap stocks have been overshadowed by mega-cap giants. But the Russell 2000 just staged its largest outperformance over the S&P 500 in history — a reminder that the “little guys” in corporate America can pack a big punch. Falling inflation, prospects of lower interest rates, and even political shifts are fueling renewed interest in small firms. With 40% of Russell2000 borrowing tied to floating rates, cuts from the Fed could provide outsized relief. And with valuations looking far more attractive than tech behemoths, small caps are increasingly catching the eye of investors, private equity, and acquirers alike. Whether this is a fleeting spike or the start of a “small-cap summer,” one thing is clear: small really can be beautiful. Source: https://www.economist.com/finance-and-economics/2024/07/18/why-investors-have-fallen-in-love-with-small-american-firms