There's less than two weeks left in 2025, but for small-caps, the new year is already here. Morningstar made light of the outperformance in small-caps, which historically manifests itself in an early year rally known as the "January Effect.†However, history has been rewriting itself as of late. Ambitious traders looking to position themselves ahead of the new year have been causing the January rally to arrive earlier than anticipated. "As with many Wall Street patterns, the timeline accelerated as traders ...

Morningstar noted the strength in midcap funds. Those focused on the growth factor have been performing especially well this year. Traders worried about large-cap stocks hitting peak valuations may want to step into the midcap arena. Long- and short-term traders can also take advantage of future upside if the market environment shifts in favor of these companies. They offer midcap valuations, but not middling performance. Much of the stock market performance in 2025 has been fueled by artificial intelligenc ...