(Bloomberg) -- Bulls looking for places to hide amid Monday's stock selloff had to settle instead for companies bearing less of the brunt: small caps.
The Russell 2000 index was down about 1% as of 1:26 p.m. in New York, compared with 2.5% slump in the Nasdaq 100. The small-cap index beat the tech-heavy gauge last week as well.
Investors are adding cash to an exchange-traded fund that tracks it, sending roughly $400 million into the iShares Russell 2000 ETF (ticker IWM) in the past two days. They've pulled money from an ETF focused on the Nasdaq 100 for four straight weeks.
The relative robustness of small caps comes after a dismal performance since June, when investors fled them as the delta coronavirus variant hampered the reopening trade. That's changed as investors fret over higher inflation and interest rates that make tech valuations look stretched. Small caps also tend to benefit from a strong dollar because they're more domestically focused.
“We think Mr. Market is telling us that a change is coming beneath the surface, and when we hit earnings season, we look for small to continue to lead,” said Steven DeSanctis, a Jefferies equity strategist.
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