Last year marked a tumultuous period for small-cap stocks, with the MSCI USA Small Cap Index enduring a substantial setback, dropping by 17% over the year. The turbulence didn’t end there, as small-cap stock index returns continued to diverge from broader U.S. market index trends in 2023, posting a mere 0.7% to the end of May vs the MSCI USA index which has risen around 10% over the same period.
Despite this trend, a beacon of optimism is beginning to emerge within the financial industry, as some analysts predict that small-cap stocks could soon outshine their large-cap counterparts.
While larger corporations often dominate the headlines and capture investor attention with their size and market influence, it’s essential not to underestimate the potential of small-cap companies.
This post originally appeared on 24/7 Wall Street.