An active small-cap ETF from T. Rowe Price pulled in $30.88 million over the past week, making it the second-largest inflow among the firm’s exchange-traded funds, according to ETF Database.
The flows into the T. Rowe Price Small-Mid Cap ETF (TMSL ) come as Goldman Sachs Asset Management reports that U.S. small-caps are trading at a 25% discount to large-caps when excluding unprofitable firms, according to the firm’s March 2026 Market Pulse report. Goldman describes this gap as near historic lows and believes small-caps are positioned for gains in 2026 due to cyclical strength, earnings recovery, and renewed capital market activity.
TMSL attracted inflows during a period when shares declined 5.7% over the five-day period, suggesting investors viewed recent price weakness as a buying opportunity, ETF Database shows. The ETF posted a 1.9% loss over the past month.
TMSL launched in June 2023 and manages $1.60 billion in assets with a 0.55% expense ratio, according to ETF Database. The strategy focuses on companies with attractive valuations, improving cash flow, high return on capital, and strong balance sheets.
Stock Picking in Small-Caps
Goldman’s report emphasizes that the current environment requires careful security selection rather than broad exposure to the asset class. The performance gap between the top 50 stocks and bottom 50 stocks in the Russell 2000 Index was nearly three times wider than the same spread in the S&P 500 during 2025.
“Valuations continue to be attractive both on an absolute and relative basis,” Goldman stated in the report. “However, dispersion is wide, volatility high, and liquidity low, making selectivity key.”
The firm also noted that U.S. small-cap companies generate 80% of their revenue domestically, compared with 72% for large caps. This positioning may benefit from domestic growth as Goldman forecasts U.S. GDP acceleration in the first half of 2026, driven by tax cuts, business investment, and a stabilizing job market.
TMSL’s top sectors include industrials and business services at 21.1% of the portfolio, financials at 16.8%, and information technology at 16.8%. The fund’s top holdings include Popular Inc. (BPOP), Tenet Healthcare Corp. (THC) and TechnipFMC (FTI).
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