After years of mega-cap dominance, the next winners could be smaller, cheaper stocks. iQoncept/Shutterstock
Early 2026 conditions indicate that small-cap value exchange-traded funds (ETFs) may be positioned for a market rotation.
As large-cap tech stocks trade at elevated valuations, smaller U.S.-focused companies are trading at wider discounts to historical averages. If interest rates stabilize or decline and earnings broaden beyond mega-cap tech, small-cap value funds could benefit from mean reversion, domestic revenue exposure, and lower starting valuations.
