For much of the year, bigger has been better in terms of performance based on market cap. But the smallest tier of firms (micro-caps) is suddenly giving the biggest names (mega caps) a run for their money in year-to-date terms, based on a set of ETFs through Friday’s close (Sep. 19).

Mega caps are still the top performer via slicing and dicing US equities based on market capitalization via iShares S&P 100 ETF (OEF), but just barely. This fund, which emphasizes the biggest of the big, is up 15.8% so far in 2025. Nipping at its heels is the smallest of the small, based on the iShares Micro-Cap ETF (IWC). Both funds are outperforming the US equities benchmark: SPDR S&P 500 (SPY), which also serves as a conventional large-cap proxy, which has a moderately lesser market-cap footprint vs. OEF’s mega-cap profile.
 

The year-to-date strength in micro caps is interesting for at least two reasons. First, IWC’s relative strength is a recent development. For much of the year, micro-cap shares have been trailing behind its larger-cap brethren. But the trend started to change in late-spring.

The first sign that micro-caps were coming alive arrived in early June, when these stocks began to overstake their small-cap cousins, which hold companies with moderately higher market caps.

The transition to top performer was complete last Thursday (Sep. 18), when IWC topped mega-caps (OEF) for a day via year-to-date results. On Friday, Sep. 19, micro caps eased and ceded the crown to mega caps once more, but only fractionally. The race for the year’s top performer remains competitive as we head into the final quarter of 2025.
 

It’s also noteworthy that the surge in micro-cap stocks (IWC) over the summer has not been accompanied by a comparable advance in small caps (IJR). The implication: a more granular view of market cap definitions has its advantages at times for asset allocation, as 2025’s horse race reminds.

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