What was a key factor impacting smaller companies positively in 2024?

The key factor positively impacting smaller companies in 2024 is better growth potential and lower prices. Smaller companies typically have greater opportunities for rapid growth compared to their larger counterparts, often due to their ability to innovate quickly, adapt to market changes, and carve out niche markets. This growth potential is particularly enticing to investors, especially when paired with lower price points that suggest high valuations have not yet been met. Consequently, in an environment where investors are looking for value, the financial metrics of small-cap companies often appear particularly attractive, driving investment in that area and contributing to their positive performance.

In contrast, increased operational costs would likely be a burden on smaller companies rather than a benefit, potentially inhibiting their ability to grow. High dividend yields, while appealing, are typically associated with larger, more established companies—smaller companies often prioritize reinvestment over returning cash to shareholders. The notion of larger companies consistently outperforming can create a more competitive landscape, which might overshadow smaller companies and limit their market share and growth opportunities. Thus, the combination of better growth prospects and lower prices stands out as the primary positive factor for smaller companies in that year.