Earlier this year, when President Trump’s tariff-induced market volatility spurred the “sell America” trade, investors vacated large-cap U.S. equities and sought out alternative trades that could minimize the fallout. But it turns out that not all of those outflows ended up overseas.
U.S. small caps, as measured by the Russell 2000 index, saw massive inflows as uncertainty gripped the market. With an average daily trading volume of 5.1 million, small caps saw inflows between 7.2 million and 9.5 million every day between April 3 and April 9. As a result, the Russell 2000—and its often overlooked basket of small-cap stocks—saw a dramatic price reversal. From its year-to-date (YTD) low on April 8 to the time of writing, the index is up more than 38%. For context, that leads the S&P 500’s recovery over the same period by five percentage points.
