“Small-cap stocks tend to be more volatile due to narrower economic moats and a greater sensitivity to macroeconomic risks, but with this greater volatility comes a higher beta and the expectation for higher returns. Small-cap stocks have earned a return premium about 2.0% over large-cap stocks since 1926,” investment research firm Morningstar writes in a profile of IWM.
Russell 2000
Full disclosure: Tom Lydon’s clients own IWM and SPY.