By: Gustian Farrow, Head of StoneX TV • Content Channels
Michael Lytle, Chief Investment Officer at StoneX Wealth, analyzes unusual performance trends between large and small cap stocks in 2025.
Lytle notes that unlike previous years where large caps often outperformed small caps by 15 percent or more, 2025 has produced far more muted returns. He points out that this mirrors 2022, another difficult year when stocks and bonds both struggled.
In recent weeks, small caps have sharply outperformed large caps. “That’s the last two weeks, small cap outperforming large by a pretty sizable margin”. Lytle compares this move to the short-lived “great rotation” of July 2024, when small caps briefly surged before the market returned to its prior trend.
Reviewing charts of prior years, Lytle highlights that leadership usually alternates decisively. In contrast, 2025 so far has lacked a clear winner, with large caps only achieving high single-digit outperformance at their peak.
Lytle suggests that 2025 may mark the start of more even leadership across market segments. “More even leadership across sectors, even leadership across growth and value, and even leadership across cap in a way that we really haven’t seen in some time”. Whether this trend continues remains to be seen, but the current pattern stands out compared with past years.
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