The Small-Cap Premium Was Supposed to Beat Large Caps Over Time. It Hasn't in 15 Years. Here's the Actual Gap.

Small-cap stocks have significantly underperformed large-cap stocks over the past 15 years, with the Vanguard S&P 500 ETF gaining 830% compared to the iShares Russell 2000 ETF's 490% return since 2010. Poor profitability, high debt levels, and passive fund flows favoring mega-cap tech have driven the underperformance. However, with small-cap earnings expected to grow 18% in 2026-2027 and valuations considerably lower, a potential rotation from large caps to small caps could be approaching.