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David Beren
Tue, March 24, 2026 astatine 12:02 PM CDT 5 min read
The S&P 500 is down connected the twelvemonth done precocious March, but surprisingly, tiny caps are not. This divergence, portion not melodramatic successful size, reflects thing much meaningful happening underneath the aboveground with a rotation distant from the mega-cap exertion enactment and much toward smaller, much domestically focused companies that person been waiting successful the wings for years.
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Small-cap funds are benefiting due to the fact that exertion stocks correspond acold little vulnerability successful their portfolios than successful mega-cap benchmarks, combined with historically inexpensive valuations comparative to the S&P 500.
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The iShares Russell 2000 ETF (NYSE:IWM) is down 1.60% year-to-date arsenic of March 19, a rougher tally than it sounds, fixed however severely large-cap tech has weighed connected the broader market. The iShares Core S&P Small Cap ETF (NYSE:IJR) is up 0.19% implicit the aforesaid period, a meaningful spread successful comparative terms. Both numbers person moderated from the much pronounced small-cap pb seen successful January and February, arsenic markets pulled backmost broadly successful March, but the rotation is real, and knowing wherefore it happened is the much utile story.
While some funds ain small-cap U.S. stocks, this is beauteous overmuch wherever the similarity ends. The iShares Russell ETF holds 1,948 companies and tracks the Russell 2000, the astir wide cited small-cap benchmark successful the world. The scale has nary profitability requirement, and astir 40% of its holdings are companies that are presently losing money. Industrials pb the assemblage premix astatine 18.36%, followed by Healthcare astatine 17.53%, Financials astatine 16.94%, and Information Technology astatine 14.48%.
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The disbursal ratio is 0.19%, and with $69 cardinal successful assets and regular measurement successful the extremity of millions of shares, it's the astir liquid small-cap conveyance connected the market. Now, comparison this to the iShares Core S&P Small Cap ETF, which holds 567 companies and tracks the S&P SmallCap 600.
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