Small-cap stocks are currently outperforming larger companies, driven by increasing hopes for an economic recovery. Investors are betting that smaller companies will benefit disproportionately from renewed economic activity.

Factors Driving Small-Cap Growth

• Economic Sensitivity: Small-cap companies are often more sensitive to economic cycles, leading to higher growth potential during recovery periods.
• Growth Potential: These companies typically have more room to grow compared to larger, more established corporations.
• Investor Sentiment: Increased risk appetite among investors is favoring small-cap stocks.

Potential Risks

While the outlook for small-cap stocks appears positive, investors should be aware of potential risks:

• Volatility: Small-cap stocks are generally more volatile than large-cap stocks.
• Liquidity: Trading volume can be lower, making it more difficult to buy or sell shares quickly.
• Financial Stability: Smaller companies may be more vulnerable to economic downturns.

Despite these risks, the current market environment appears favorable for small-cap stocks, offering potential opportunities for investors seeking higher growth.