For years, the small cap premium has been under siege. Critics have argued that the well-documented tendency of smaller stocks to outperform larger ones—a cornerstone of factor investing since Rolf Banz first identified it in 1981—has faded or perhaps never truly existed in a reliable, investable form. The standard academic measure of the size factor, the Fama-French SMB (Small Minus Big), has delivered a monthly average return of just 0.17% over the past six decades, with a t-statistic too weak to be statistically convincing.

But what if the problem is not the small cap premium itself—but the way we have been defining it?

That is the central argument of a November 2025 research paper from Andrew Berkin and Christine Wang at…