The strengthening economic outlook for the U.S. has also helped strengthen the U.S. dollar against its basket of peers. With an appreciating U.S. dollar, large multinational U.S. companies will find revenue lowered when converted back to an appreciating USD, whereas small-cap companies are less affected by foreign revenue streams.
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.
For more information on small-capitalization stocks, visit our small-cap category.