The stock market rally has been all about large caps

into 10 baskets of 50 stocks, organized by market cap size. The top decile of the 50 largest stocks in the index was the only subsector to have outperformed the broader S&P 500 this year.The larger stocks have shown more resilience to higher interest rates in an environment where many expect rates to be held high for longer than initially expected.

"We view higher rates as a clear headwind to small caps, but we're skeptical that lower rates offer a comparable benefit — a key reason we remain overweight large caps," Wilson wrote. The team found that within those indexes, stocks with a market cap over $1 trillion have returned a combined average of 41% this year, while those with market caps under $1 trillion have gained just 0.42% year to date.

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