From Nasdaq Inc.:

Small-cap stocks offer the potential for exponential gains but are also more volatile than blue-chip companies. The Russell 2000 has underperformed the S&P 500 in the last 10 years, and the stock market rally was driven by large-cap tech giants. However, small-cap stocks may be poised for a rebound. Fundstrat Global Advisors is bullish on small-cap stocks in 2024 and expects the Russell 2000 to rise 51%.

Investor nervousness about interest rate hikes and fears of a recession have caused the Russell 2000 to lag significantly behind the S&P 500’s performance. However, interest rate cuts and cooling inflation levels could provide an opportunity for a small-cap rebound. The iShares Russell 2000 ETF (IWM) is a popular option for gaining exposure to small-cap stocks, with an expense ratio of 0.19% and significant assets under management.

Overall, while small-cap stocks may have lagged in recent years, there is optimism for a rebound in 2024. Historically low price-to-book ratios for small-cap stocks and expectations of strong gains could make them an attractive investment opportunity. Watch the movement of the Russell 2000 closely as a potential indicator of a broader small-cap stock rebound.



Read more: Here’s One Way to Bet on a Rebound for Small-Cap Stocks