Can Small-Cap ETFs Continue to Run Ahead of Peers?

Since Nov. 8, the index behind iShares Core S&P Small Cap (IJR) outperformed its mid- and large-cap brethren.

In addition, economically sensitive sectors of the broader S&P 1500 index, such as financials and industrials gained ground, while more defensive sectors, such as consumer staples and utilities sold off.

For possible answers to what’s behind these moves and can they continue unabated, we turn to Sam Stovall, Chief Investment Strategist for CFRA.

According to Stovall, these performances are likely based on two things: 1) the exiting of positions placed ahead of the highly expected Democratic victory, and 2) the speculation that on a macro level the new Trump administration’s policies will lead to higher U.S. GDP and EPS growth, due to a sharp increase in infrastructure spending, a resulting acceleration in the Fed’s rate-tightening timetable, and a strengthening of the U.S. dollar.

RELATED: Where to Look for Small-Cap Value in ETFs