When To Buy Small Cap Funds -

Improving like rising GDP and falling unemployment often signal it is time for small-caps to outperform. 2. The Interest Rate Signal

When large-caps have dominated for a long period—as they have for over a decade—the can widen significantly. when to buy small cap funds

Small-cap companies typically carry more debt relative to their earnings than large firms. Because of this, their performance is highly sensitive to the cost of borrowing: Improving like rising GDP and falling unemployment often

While large-cap stocks often lead the charge during the very first stages of an economic recovery, small-caps historically hit their stride during . Small-cap companies typically carry more debt relative to

: Lower rates reduce financing pressure on small businesses, directly boosting their bottom line. 3. Valuation Gaps

Market cycles of outperformance for small-caps vs. large-caps last about on average.

As the economy stabilizes and demand improves, smaller, more agile firms can see revenue and profit grow more sharply than their massive counterparts.