Relaxation of Sarbanes-Oxley audit and reporting rules passed unanimously by the Securities and Exchange Commission last month may address the burdensome compliance costs of the law that companies-especially small ones-complained about, but it probably won't be enough to reverse the small-cap slide.

Since January, small-cap funds, which represent $443 billion under management, have seen $2.5 billion in outflows, according to data from Boston-based Financial Research Corp. Compliance costs are chief among the factors smaller companies-once the market sweethearts-cite for their more recent slump in performance. Year-to-date through Aug. 1, small growth funds have returned 5.85%, whereas large growth funds are up 6.86% and mid-cap growth funds are up 9.9%, according to Morningstar of Chicago.

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