2026 could be the year of Small Caps

DavidMarlin
01-13

2026 could be the year of Small Caps.

It has been so far.

Consensus estimates are projecting huge EPS growth for the $E-mini Russell 2000 - main 2603(RTYmain)$ this year, vastly outpacing Large Caps.

$iShares Russell 2000 ETF(IWM)$ $iShares Russell 2000 Growth ETF(IWO)$ $S&P 500(.SPX)$ $NASDAQ 100(NDX)$ $E-mini S&P 500 - main 2603(ESmain)$ $E-mini Nasdaq 100 - main 2603(NQmain)$ $E-mini Dow Jones - main 2603(YMmain)$

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Small Caps Are Outperforming: Can IWM Beat SPY This Year?
U.S. small caps are enjoying their longest streak of outperformance versus large caps in seven years. IWM is up 7.86% this month, far ahead of the S&P 500’s 1.45% gain. The last time small caps led for longer was January 2019, during a post-crash rebound. Investors point to the January effect and expectations that small-cap companies may be less exposed to potential Donald Trump-related tariff risks. Is this small-cap rally mainly a January effect or the start of a broader rotation? For 2026 positioning, would you overweight small caps or stick with large-cap leaders?
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