Furthermore, the upbeat pace in U.S. small-caps are attracting foreign investors as well. According to the CME Group, there is growing interest among global investors for U.S. small-cap exposure, especially with volume coming from Europe, Asia-Pacific and Latin America regions in addition to North America.
Related: The Best Small-Cap ETFs Leading Market’s Charge
“Small-cap companies on average are less exposed to foreign markets and currency fluctuations than larger companies,” said BlackRock. “The U.S. dollar has rallied more than 5% against a basket of foreign currencies since April. This has led to relative foreign currency weakness that has eroded large-cap companies’ overseas profits, resulting in lower earnings and equity valuations. In contrast, small companies enjoyed lower input costs for imported raw materials due as the U.S. dollar has strengthened.”
For more information on small-capitalization stocks, visit our small-cap category.