Small-cap stocks have led the rally in 2018 so far, outperforming both mid- and large-cap stocks. Small-cap stocks, as represented by the Russell 2000 Index, are handily leading the market, posting a gain of 11.23% versus 5.9% for the S&P 500 as of July 23, 2018.
A small-cap company is generally classified as a company with a market capitalization (market value of outstanding shares) of between $300 million and $2 billion, whereas a large-cap company carries a market capitalization of more than $10 billion. Thus, these companies are not exactly your mom and pop shop on the corner, but in the business world, they are still considered small.
This week’s Thought for the Week examines what is driving this small-cap rally, and explains what it could mean for investors.