This is due to the law of large numbers. This means it’s more difficult for larger companies to grow as they get bigger. Plus, small-cap stocks have historically outperformed their larger-cap peers. From December 31st, 2000 to December 31st, 2020, the small-cap Russell 2000 index returned 308.4%, significantly outperforming the 184.5% gain of the large-cap S&P 500 index.
Small-cap stocks also benefit from an economic recovery as they are more sensitive to the economy. So far this year, the Russell 2000 is already up 13.6%. This means that as the economic recovery continues, small-cap stocks like Greif Inc. (GEF), Inter Parfums, Inc. (IPAR), and Abercrombie & Fitch Company (ANF) are definitely worth considering.