Possible Inflection Point for Small Caps

Possible Inflection Point for Small Caps

Small Caps recently snapped an extended streak of rolling negative returns. Historically this has led to a period of strong performance over the following year. We examine.

Since 1980, the Russell 2000 Small Cap Index has experienced 12 “streaks” where rolling 12-month returns were negative for at least four consecutive months (shaded below).  The latest period just ended in June 2023.

Index returns do not reflect any management fees, transaction costs, or expenses. Indexes are unmanaged, and one cannot invest directly in an index. Past performance does not guarantee future results.


For the first 11 occurrences, following the end of the negative rolling periods, the average oneyear return for small cap stocks was over 26%.  The latest streak ended in June 2023 and so far is trending similarly to the previous 11 occurrences.


Russell 2000 – Streak of Consecutive Months With
Negative Rolling 12-Month Return
Streak Start Streak End Streak Length
12-Month Return Post Streak End
Nov-81 Sep-82 10 65.8%
Apr-84 Jan-85 9 14.8%
Oct-87 Oct-88 12 13.5%
Apr-90 Feb-91 10 31.7%
Oct-94 Mar-95 5 27.1%
Aug-98 Jun-99 10 12.8%
May-02 Jul-03 14 15.8%
Nov-07 Nov-09 24 25.4%
Apr-12 Aug-12 4 24.5%
Dec-15 Aug-16 8 13.3%
Feb-20 Aug-20 6 45.6%
Jan-22 Jun-23 17 ?
Average 12-Mo Return Post Streak End 26.4%

Source: Bloomberg

Index returns do not reflect any management fees, transaction costs, or expenses. Indexes are unmanaged, and one cannot invest directly in an index. Past performance does not guarantee future results. 


Could this be the latest positive inflection point for small cap stocks? 

At Cambiar, we remain quite optimistic about the current macro backdrop for small cap businesses.  Combining these observations with our focus on investing in high-quality franchises at attractive valuations and company-specific fundamentals, we believe that this is a time for investors to consider an actively managed portfolio like the Cambiar Small Cap strategy.


To learn more about Cambiar’s Small Cap solutions, please visit:

Cambiar Small Cap Fund

Cambiar Small Cap Value SMA





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