Small-cap companies have significantly weaker profit margins and higher debt levels than large-caps, making them lower quality investments despite premium valuations.

"equity valuations have simultaneously become significantly less attractive than they were at the start of the year. 'A lot of the easy money, the bigger gains are going to be hard to come by,' Urbanowicz warned."

"Small-cap net profit margins sit near 4.4%, while large-cap margins are closer to 14.5% to 14.8%. Small companies carry net debt of roughly 4.5 times EBITDA, versus about 1.5 times for large caps."