[Re-posting to correct formatting]

I've largely stayed away from small caps since switching to Large Cap growth in 2017. For people here who want to follow a backtested screen that has done well, there's one on Portfolio123 called Small Cap Focus with the following stats:

Period   CAGR   GSD  MDD
YTD      19.7%  13%  -19%
3-yr     20.8%  23%  -21%
17-yr    37.0%  24%  -59%

That 17-year CAGR of 37% since 1/1/2007 looks good on paper, but it's been a wild ride. For example, one of the best performers this year is TZOO. Take a look at its chart this year, and let me know if you could stomach that roller coaster.

I subscribe to P123 for the quality of the data and the backtests. They have quite a few pre-built model screens, and you can build your own easily.

To invest in small caps now, an ETF like IWM may be the way to go. You get the diversification, and small caps generally do well in January. Plus, there is the anticipation that lower rates next year will help smaller companies.

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