From CNBC: 2024-07-20 11:00:01

Dave Nadig, ETF journalist, observes a diversification trade fueling flow into small caps. Investors aren’t just pivoting from growth trades – they’re expanding portfolios to navigate election year volatility. Yet, Nadig questions if this surge will sustain, as small caps outperform larger indices, setting up the potential for more growth ahead.

State Street Global Advisors’ Anna Paglia notes strong investor risk appetite, with sector laggards benefitting from anticipated rate cuts. Despite this, she dismisses the notion of a mass exodus from money market funds, calling such a move unlikely. Investors seem content holding onto cash reserves for now, dampening any major market inflow.

Read more: What recent small cap rally says about risk