As of early 2025, small-cap positioning among fund managers has reached historic lows. This trend is driven by a combination of factors, including sustained low interest rates, the increasing popularity of indexing, and the underperformance of small-cap value stocks compared to their large-cap counterparts.
According to recent data, fund managers have significantly reduced their exposure to small-cap stocks, reflecting concerns over market volatility and economic uncertainty. This trend has been observed across various segments of the financial industry, with many managers opting for the perceived stability of large-cap investments.
Small Cap positioning among Fund Managers is currently at historic lows.
Everyone is crowded into the Mega Caps.$RTY $IWM $IWO $SPY $QQQ pic.twitter.com/M5FOPKtj0S
— David Marlin (@Marlin_Capital) January 15, 2025
However, some veteran fund managers see potential for a revival in small-cap investments. They argue that the current market conditions provide opportunities for savvy investors to identify undervalued small-cap stocks that could yield substantial returns. This contrarian view is based on the historical performance of small-cap stocks, which have often outperformed large-caps during economic recoveries.
Despite these optimistic outlooks, the overall sentiment towards small-cap stocks remains cautious. The current positioning reflects broader market trends and investor preferences, which are influenced by macroeconomic factors and risk assessments.
Sources:
https://www.morningstar.com/funds/these-small-cap-funds-have-seen-a-torrent-of-outflows
37 views