The small-caps rally is occurring as the U.S. economy is forecast to accelerate from what has been the slowest recovery since World War II. Gross domestic product will increase 2.7 percent this year and reach 3 percent in 2015, according to the median estimates from 99 economists surveyed by Bloomberg.

China’s economic slowdown and political crises from Thailand to Ukraine helped fuel demand for American small-caps as investors shunned conglomerates that are more reliant on global revenue. The average firm in the Russell 2000 gets 84 percent of its sales from the U.S., compared with 70 percent for the S&P 500, data compiled by Bloomberg show.

Growth Premium

“Investors are willing to pay more for growth,” Kristina Hooper, a U.S. investment strategist at Allianz Global Investors in New York, said in a phone interview. The firm oversees $475 billion. “You do have greater sensitivity to the economic recovery so as the recovery picks up, small-caps will continue to benefit.”

Exchange-traded funds investing in small-cap shares attracted $5.73 billion this year through March 20, compared with withdrawals of $10.7 billion from those focused on large companies, data compiled by Bloomberg show.

A quarter of Russell 2000 companies didn’t make any money in the last 12 months and their shares rose 7.6 percent on average in 2014, data compiled by Bloomberg show. Firms with profits trailed, rising 2.2 percent.

Biotech Rally

Eight stocks more than doubled this year. Among them, all but one are drugmakers that are unprofitable.

Intercept Pharmaceuticals Inc. soared 473 percent after saying its experimental liver-disease treatment reached its goal in an early trial. The New York-based company, whose sales were less than $2 million in 2013, won’t make a profit until 2017, analysts forecast. While Chief Executive Officer Mark Pruzanski said in January that it’s too early to predict when the drug will be marketed, the stock performed the best in the Russell 2000.

InterMune Inc. jumped 135 percent this year as its drug pirfenidone for a fatal lung disease met goals of a study expected to support U.S. approval. The Brisbane, Calif.- based company has reported losses every year in the past decade. Analysts surveyed by Bloomberg say it won’t make any money until 2016. InterMune said in a regulatory filing in February that the timing of its profitability is “highly uncertain.”