SMID-Cap Stocks Surpass Large-Caps in August as U.S. Equity Market Expands
Rongchai Wang Sep 09, 2025 21:47
In August, small and mid-cap stocks outperformed large-cap benchmarks, marking a broader rally in U.S. equities beyond mega-cap tech.
In a noteworthy shift within the U.S. stock market, small and mid-cap stocks outperformed their large-cap counterparts in August. This development comes as the rally in U.S. equities extends beyond the realm of mega-cap technology companies, according to VanEck.
Performance Highlights
During the month of August, the performance of small and mid-cap stocks, often referred to as SMID-caps, drew significant attention. The Morningstar US Small-Mid Cap Moat Focus Index, which tracks the performance of attractively priced companies with sustainable competitive advantages, led this charge, highlighting the potential of smaller firms to thrive in a diversified equity market.
Broader Market Implications
The outperformance of SMID-cap stocks suggests a broadening of the U.S. equity rally, traditionally dominated by large-cap tech firms. This trend reflects a growing investor interest in companies outside the mega-cap spectrum, potentially due to the attractive valuations and sustainable competitive advantages these smaller companies present.
Impact on Investment Strategies
The recent performance of SMID-cap stocks may influence investment strategies, prompting investors to consider diversifying their portfolios beyond large-cap stocks. The VanEck Morningstar SMID Moat ETF (SMOT®), which focuses on small and mid-cap companies with strong competitive moats, offers a vehicle for investors looking to capitalize on this trend.
Related Market Dynamics
This shift in market dynamics is supported by changes in the Morningstar Wide Moat Focus Index, which increased its constituent count and adjusted its methodology to allow for more diversified exposure and longer holding periods. These adjustments may contribute to the sustained performance of smaller companies in the index.
For more detailed insights, readers can view the original article on VanEck.
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