There was some evidence of hedging Monday via near term options in Small-Caps, via puts in IWM (iShares Russell 2000, Expense Ratio 0.28%)
With Small Caps right around all-time highs on this most recent leg up, at this time of year it likely makes sense for institutional portfolio managers to lock in profits via hedged downside on underlying long positions or tilts in a portfolio using options strategies like this.
IWM’s 2013 break-out has seen non-household names like PCYC, OCN, GWR, and DDD reach lofty heights.
Even with the recent broad-based pullback off of the highs, IWM still sits only 1.1% below its alltime high and the fund itself has been trading heavier than average volume in recent sessions (ADV is 32.5 million).
Portfolio managers whom have been long small-caps in 2013 have been rewarded handsomely in terms of out-performance versus the Large Cap S&P 500 by an impressive margin YTD, as well as in the trailing one year period.
Rolling back this measure out to a trailing five year period includes a time period of notable small-cap underperformance and suggests that the current out-performance among such names is fundamentally due, or expected given economic and market conditions, etc.
How has strong performance in the Small-Caps space benefitted asset growth in this area of the market? IWM has pulled in an impressive $6.7 billion YTD making its total asset base $28 billion and the fund averages a massive 31 million shares traded daily.
iShares seems to have a stranglehold on the top end of this market in terms of assets under management, as the next largest fund in the category IJR (iShares Core S&P Small Cap, Expense Ratio 0.16%) holds $12.3 billion in AUM.