It’s still too early to draw conclusions about how or if the new year will differ from 2025 from a US equity market perspective. But a possible early clue that a shift is underway can be gleaned from reviewing performances for US equity factors so far in 2026.
We’re still less than two trading weeks into the year and so a boatload of caveats accompanies any data dive at this point. But after looking at the numbers it’s hard not to wonder if the trading year ahead will remix the narrative of winners, losers and relative laggards. Let’s start by stacking up performances of the main factor risks for stocks via a set of ETFs. (In a separte post, I’ll follow up with the same treatment for equity sectors.)
The factor leader for US equities so far in 2026: micro-cap shares (IWC), which is posting a 6.2% rise through yesterday’s close (Jan. 12). For the moment, the performance flips the script on last year, when the high-beta factor (SPHB) outperformed the field by a wide margin. So far this year, high beta (SPHB) is trailing, albeit only modestly via a 5.1% year-to-date gain.
US stocks overall, via the SPDR S&P 500 ETF (SPY), are even further behind, rising a relatively modest 1.9% year to date (red line in chart above).
The weakest factor performance so far in 2026: the low-volatility factor (USMV), which is struggling to keep up and is currently higher by just 0.7% this year.
Drawing conclusions from 2026’s six trading days may be little better than a coin flip at this point, but it’s worth noting the IWC’s leadership is hardly a bolt from the blue. The fund has been on a roll for months, and its current technical profile still looks bullish. Indeed, the fund closed at a new high yesterday, which suggests the party will continue for the foreseeable future.
Micro-caps tend to fly under the radar on Wall Street, a bias that’s been easy to rationalize in recent years amid large-cap dominance. But if the early results of 2026 are a guide, it’s timely to keep an eye on the smallest tier of publicly traded companies.
