Category: Small Cap Growth Commentaries

Small-cap equities staged a powerful recovery in the second quarter, more than reversing the first quarter’s conflict-driven weakness. Following the cease-fire that was announced after the market close on April 7, risk appetite returned in force and capital continued to concentrate in the AI build-out theme, where semiconductor, high-speed-connectivity, and data-center-infrastructure names posted extraordinary gains…

Following a robust U.S. equity market performance in 2025 that was led by technology and large capitalization stocks, the first two months of the year began with a fairly strong rotation into value and small capitalization stocks . . . which was interrupted on February 27, 2026, by the shock of airstrikes on Iran by…

Artificial intelligence and political policy (e.g., tariffs, regulation, defense funding, immigration, Fed policy) continued to dominate business headlines and fuel market volatility. While at the same time resilient consumer spending and increasing capital investments underpinned the ongoing earnings growth of public companies. The result has been equity markets that continue to grind higher despite underlying…

Small-capitalization stock performance was robust in the third quarter, both absolutely and relatively, with the Russell 2000® Index +12.39% and the Russell Microcap® Index +17.03% vs. the Russell 1000® +7.99%. However, it was a very difficult period for active managers to keep up and deeper analysis highlights the primary reasons why: the outperformance delta between individual…

U.S. small-cap equities posted strong gains in the second quarter. After the U.S. administration’s tariff pronouncements sparked early April’s sell-off, the market rebounded once investors recognized the steep rates were more a negotiating tactic than permanent policy. A temporary 90-day rollback created room for talks and minimally will stagger any additional inflationary impacts further into…

U.S. equity markets declined in the first quarter, pressured by a mix of policy shifts and increasing market uncertainty. The new presidential administration announced tariffs targeting Canada, Mexico, and China, some of which were implemented, while others were delayed or rolled back. The shifting nature of these actions introduced uncertainty around import costs and supply…

Macroeconomics and interest rate levels continued to dominate the factors driving U.S. equity performance. As a result, small-cap stocks experienced volatility in the fourth quarter, ultimately ending the period relatively flat. Initial strong post-election gains were erased as monthly inflation reports remained elevated, and the Federal Reserve signaled a more restrained approach to future rate…

Small-capitalization stocks posted strong returns in the third quarter, outperforming large-caps, and clawing back a small amount of the year-to-date underperformance. While the end result was satisfying, the intra-quarter path was very volatile as the market see-sawed between various data-points that reflected improving inflation trends, resilient GDP growth, negative earnings revisions, conflicting labor data, and…

Broadly speaking, growing macro-economic concerns led to a further widening of the performance gap between large cap vs. small cap equity markets in the quarter, with the S&P 500® Index +4.3% (+15.3% YTD) vs. the Russell 2000® Index -3.3% (+1.7% YTD). This was largely a response to higher-than-expected monthly inflation data, which drove a back-up in…

Equity market returns in Q1 started the year off strongly, with large capitalization stocks continuing to out-perform (Russell 1000® Index +10.3% vs. Russell 2000® Index +5.2%) and growth outperforming value (Russell 2000® Growth +7.6% vs. Russell 2000® Value +2.9%). U.S. employment levels remained robust, and monthly GDP growth continued to beat expectations. With the rate of…

Equity markets returns in 2023 were ultimately quite constructive, but the path was very volatile and dominated by expectations for interest rates. All year long, market participants were hyper-focused on every nuanced bit of news that might indicate the future path of the Fed Funds Rate, a key macro factor that will impact the depth…

Macroeconomics and interest rate levels specifically continue to dominate the factors driving equity performance. While pockets of the economy have experienced significant corrections due to normalizing consumer behavior and supply chains, overall U.S. employment levels and consumption have remained relatively steady and better than original estimates entering the year. Additionally, while the rate of inflation…

U.S. equity markets shook off the brief “banking crisis” and a lackluster earnings reporting period to continue their march toward recovery, ending the half closing in on early 2022 highs with growth stocks outperforming in both large and small caps. This positive development unfolded as each subsequent month’s macro-economic data reports showed the rate of…

As anticipated entering the year, macro-economic news continues to dominate the headlines and is driving a high level of equity market volatility. The year started off strong, extending the rebound that started in Q4 . . . until the strains from the record pace of interest rate increases finally caused something to “break”: two regional…

While Q4 provided a welcome reprieve and possibly the first indication that we can begin to look forward to a market backdrop that is more constructive for individual stock-selection, as a whole 2022 was a disappointing year for investors, particularly those investing in growth-oriented strategies.  Excessive inflation was the main culprit – a result of…

Quarter Summary: It was another difficult (and volatile) quarter for U.S. equity market returns, driven by macro factors as the peak and duration of higher interest rates continue to be debated and absorbed into both valuations and future earnings expectations. Broad inflation measures (CPI/PPI) continued to come in hot and the Federal Reserve aggressively increased…