Risk free rate correlation to small caps I will try to make it clear why I believe small caps will outperform as interest rate rises. This will benefit investors that own shares in Acuityads or other small cap stocks; I.e, Adcore :)
The 10-year risk free rate is currently at 1.31%
The reason for the small cap under performance has a lot to do with the feds purchasing of treasuries over the past year or so which in turn drives the yields lower. When the economy is struggling the small caps are struggling too. More attention is given to the large cap players as they are viewed as being more stable and safe.
As interest rate rises, it is typically associated with good economic growth and smaller companies will show strength during periods of an economic recovery.
My guess is that when the risk free rate "normalizes" to pre pandemic rates at 2-2.5% then we should see companies such as Acuityads outperform the larger ones.
With inflation being a real threat over the next year, my guess is that the risk free rates will rise to catch up with inflation.
I believe 2022 will be a strong year for Acuityads.