Large Caps Moving Up-Proof Is In ETFs

So far this year it looks like small-caps are losing ground while large-caps are making a comeback, as evidenced by the returns on exchange traded funds (ETFs).  In recent years, large-caps trailed small-caps, but the market action is showing a narrower gap between them.  John Spence for MarketWatch reports economists and analysts predicted, for years, large-caps would take the lead and it looks like this might be the year.

The Russell 2000 Index, the small cap index, outperformed the blue-chip S&P 500 by more than 64% for the 6 years ended April 30,2006. During the past year the S&P has regained 7.4%.  Mergers within the S&P 500 have helped push the large cap leadership into action. So far this year, the SPDR S&P 500 (SPY) is up 8%, while the iShares Russell 200 (IWM) is up 5%.

For full disclosure, some of Tom Lydon’s clients own IWM.