While it is premature to call the bottom in markets, a key consideration for investors is how do Small Cap stocks perform into a recovery. Many simply assume that Small Caps would recover after the broader market as investors regain confidence, however history shows the opposite to be true. On the available data, while Small Caps have historically had greater falls than the broader market leading into recessions, they have also outperformed the broader market during the recovery phase.1
This is because riskier assets tend to be sold down further in a down market, and recover faster than more defensive assets once investors look through the malaise into a potential economic recovery.
1 Past performance is not a reliable indicator of future performance.