Small-cap stocks, typically valued between $300 million and $2 billion, underperformed in 2025. The Russell 2000 index, tracking 2,000 small-cap stocks, returned 12% compared to the S&P 500’s 17% rise. However, historically, small caps have outperformed large caps by an average of 2.85% annually since 1927.

Large-cap companies have led the market for a prolonged period, but forecasts suggest a shift to small-cap dominance in 2026. Factors like valuation, potential interest rate cuts, and small-cap resilience during recessions indicate the potential for small-cap outperformance. The iShares Russell 2000 ETF offers exposure to nearly 2,000 small-cap companies.

The iShares Russell 2000 ETF has seen average annual gains of 8.05% since its inception in 2000. With a lower management fee compared to industry averages, the fund presents a cost-effective way to invest in small caps. Analysts predict a resurgence in small-cap stocks, making this ETF worth considering for investors.

Experts predict a turnaround in small-cap stock performance in 2026, citing factors like lower valuations, potential interest rate cuts, and small-cap resilience during economic downturns. The iShares Russell 2000 ETF provides exposure to a broad range of small-cap companies, offering investors a simple and cost-effective way to capitalize on potential growth opportunities.

Read more at Yahoo Finance: 3 Reasons Small-Cap Stocks Could Outperform in 2026 — and 1 Fund to Buy Now