Small caps continue to lag the S&P 500 on near every time frame. Below is the ratio of the Russell 2000 Index vs. the S&P 500, charted, and on a 5-yr basis. The ratio is currently in the 3rd percentile! While small caps lagging the broader market by this much isn’t a good thing, historically, for the near-term trajectory of overall equity markets, I think taking a closer look in adding more exposure to this asset class now makes sense – especially vs. large caps.
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