If history is any guide, large-cap stocks will outperform small-cap stocks through Dec. 31, says Marketwatch columnist Mark Hulbert.

Going back to 1926, the average small-cap stock’s return minus the average large-cap’s return is negative 0.2 percentage point for December, according to data from Eugene Fama of the University of Chicago and Ken French of Dartmouth College.

The outcome is positive 2.28 percentage points for January, and positive 0.23 percent for the average of all months.

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So what explains the January and December discrepancies? It’s the activity of institutional money managers, Hulbert says.

“[C]ompensation incentives lead them to make their portfolios look more like the large-cap dominated S&P 500 as the year progresses,” he writes. “This, in turn, causes small-cap stocks to be at their most unpopular in December.”

Managers are often paid for beating the S&P 500. So those money managers who are doing so will buy S&P 500 shares to lock in their gains, Hulbert says.

And those who are trailing the index will load up on its shares to avoid further losses.

Once January comes, the managers are ready to take the risk of small-cap stocks again, Hulbert says.

Richard Bernstein, an independent market strategist, is bullish on small-cap stocks, though he doesn’t specifically address the month of December.

He told CNBC last month that the U.S. economy’s recovery is helping small-cap outperform large-cap, and he expects that trend to continue.

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