Small-cap stocks are facing an existential crisis in today's market. While ETF inflows hit a staggering $1.5T last year, small-cap focused funds experienced massive outflows. The contrast couldn't be starker.

Large-cap assets have dominated for five consecutive years straight. Allocation to smaller companies has hit decade lows, new product launches in the small-cap space have practically stopped, and the overall sentiment is grim—'left for dead' doesn't even begin to cover it.

This concentration of capital into mega-caps reveals a critical market dynamic worth watching. When allocation flows dry up and sentiment turns this bearish, it typically signals either capitulation or the setup for a sharp tactical rotation. The question isn't whether small caps will recover—history suggests they will. The real question is when investors will finally rotate back.