While trying to decide if to invest in VTI or VOO, I learned that the main difference is further diversification with VTI having ~3600 companies including mid and small caps (remaining ~80% of VTI is VOO). This got me thinking… while it was the mega caps – specifically the grand 7, that carried the market up the last many months, when do small cap companies thrive?
Times like today with high interest is very difficult for them to grow. In the meantime, economists are saying the low interest days we've seen the past 5~10 years is not likely to come again for a long time. To me this sounds like the environment for small cap companies to grow is tightening and their future outlook isn't too great. There will be individual companies that develop new technology and become successful; however, would it be fair to predict slow growth for small cap companies as a whole and decide to invest into VOO instead of VTI? My goal is to retire at 50 which gives me 16 years for timeline.
TLDR: Under what environment do small cap companies thrive? With anticipation of prolonged high interest days, is it fair to predict a slow growth of small and mid cap companies which makes me to decide to invest in VOO instead of VTI?
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