Does the January effect still work for small caps?
Not reliably. Since 1988, the Russell 2000 has beaten the S&P 500 in January in only 41% of 39 years. Small caps averaged +0.74% in January against +0.68% for large caps.
The effect was documented decades ago and appears to have been traded away. Last five Januaries: 2026 small +5.31%, large +1.37%; 2025 small +2.58%, large +2.70%; 2024 small -3.93%, large +1.59%; 2023 small +9.69%, large +6.18%; 2022 small -9.66%, large -5.26%.
More on Russell 2000. How to read these numbers: guide.
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