Strong run for small-cap stocks is just getting started Small-cap stocks, which tend to be more cyclical and more volatile, have eclipsed the performance of the stocks of larger companies by most measures over the past nine months. Progress on a COVID vaccine and the reopening of the economy bodes well for more big gains by small-cap funds this year. January 11, 2021 4 MINS Small-cap stocks’ impressive rally off the March 2020 low should have financial advisers rethinking portfolio allocations heading into a year in which smaller companies could continue to lead. The key, however, will be choosing wisely between active and passive strategies, and even being selective among the index fund offerings.