How Small Cap ETFs Are Leading the Market Rally

On this episode of ETF Investing with Fexingo, Lucas and Luna dig into the small cap rally that has accelerated in late May 2026. With the Russell 2000 up 6.3 percent in the past five days, far outpacing the S&P 500's 2.3 percent gain, they explore why small caps are suddenly the market's favorite trade. Lucas breaks down the structural drivers: the Fed holding rates steady at 3.625 percent, a weakening dollar, and the smaller company earnings recovery that's finally showing up in the data. Luna brings up the risk of a Strait of Hormuz oil disruption, which could disproportionately hurt small caps, and the two debate whether this rotation has legs. They also discuss which ETF strategies—pure small cap, small cap value, or equal-weight S&P 500—might be the best way to play it. Specific ETFs mentioned include IWM, AVUV, and RSP. A concise, data-driven conversation for ETF investors looking to understand today's market leadership. #SmallCapETFs #Russell2000 #MarketRotation #IWM #AVUV #RSP #FedPolicy #OilPrices #DollarWeakness #EarningsRecovery #ETFInvesting #Finance #Investing #StockMarket #FexingoBusiness #BusinessPodcast #SectorRotation #PortfolioDiversification Keep every episode free: buymeacoffee.com/fexingo