--- title: Small Cap - Cheap relative to Large Cap? description: Small Caps have had a worse 2021 than Large Caps, and are right now at the cheapest relative value in 20 years. image: https://blog.anchoreafi.com/hubfs/Webp.net-resizeimage%20(6)-2.jpg --- ![](https://blog.anchoreafi.com/hubfs/Webp.net-resizeimage%20(6)-2.jpg) # Small Cap - Cheap relative to Large Cap? Published by [ Augusto Quiñones ](https://blog.anchoreafi.com/en/author/augusto-quiñones) on Jul 28, 2021 9:56:46 AM At the end of July 2021 we can say that the economic recovery has had a favorable effect on financial markets. The S&P 500 and the MSCI World are up 17.5% and 14.38% respectively. In general terms, the forecasts are good for the second semester of the year according to the consensus, since economic indicators continue to rise and monetary and fiscal policies do not seem to show signs of retreat in the short term. In this context, we see that small caps have lagged behind. So far this year, the Russell 1000 index (the thousand largest companies in America) has gained 14%, while the Russell 2000 (the two thousand with the smallest capitalization) has barely achieved 1.8%. ![Graph - US - Russell 1000 vs 2000](https://blog.anchoreafi.com/hs-fs/hubfs/Graph%20-%20US%20-%20Russell%201000%20vs%202000.jpg?width=960&name=Graph%20-%20US%20-%20Russell%201000%20vs%202000.jpg)   Investors have paid less attention to this riskier sector, and we note that the premium being paid by larger companies is the highest in 20 years. Taking into account that small companies tend to be more sensitive to the economic cycle, we believe that the Small Cap segment may be one of the best performers in 2H 2021. Tags: [Economy](https://blog.anchoreafi.com/en/tag/economy), [United States](https://blog.anchoreafi.com/en/tag/united-states), [Equity](https://blog.anchoreafi.com/en/tag/equity) [Back to Blog](https://blog.anchoreafi.com/en) - [Tweet](https://twitter.com/share) ## Related Articles ## [Rotation towards Value: How long can it last?](https://blog.anchoreafi.com/en/rotaci%C3%B3n-hacia-c%C3%ADclicos-cu%C3%A1nto-puede-durar?hsLang=en) Over the past ten years we have become used to Growth stocks yielding much higher returns than... [Read More ](https://blog.anchoreafi.com/en/rotaci%C3%B3n-hacia-c%C3%ADclicos-cu%C3%A1nto-puede-durar?hsLang=en) ## [Size does matter](https://blog.anchoreafi.com/en/el-tama%C3%B1o-s%C3%AD-importa?hsLang=en) Broadly speaking, largest capitalization companies (specially FAANGs), are the ones that have best... [Read More ](https://blog.anchoreafi.com/en/el-tama%C3%B1o-s%C3%AD-importa?hsLang=en) ## [Are cheap companies a better investment?](https://blog.anchoreafi.com/en/are-cheap-companies-a-better-investment?hsLang=en) Financial logic tells us that companies with a lower PE Ratio are cheaper and, consequently, those... [Read More ](https://blog.anchoreafi.com/en/are-cheap-companies-a-better-investment?hsLang=en) **