About a month ago, in late September, back when the equity markets were toiling near their lows, we pointed out the relative underperformance of U.S. small cap equities compared to large caps in 2011, notably those tied to the Russell 2000 Index .
At the time, we highlighted the fact that iShares Russell 2000 (NYSEArca: IWM) was taking in a substantial amount of assets, to the tune of $1.4 billion over a week’s time. The small-cap ETF posted $2.9 billion of inflows for October. [ETF Flows]
The activity led us to believe that institutional players were making tactical model shifts away from large cap equities and into small cap names in order to potentially capitalize from a narrowing of the performance gap that we have witnessed between large and small caps in 2011.
Year to date, IWM is down 4.19% versus the S&P 500 Index up 0.39%.
This week, with the equity markets exhibiting resiliency the past two sessions, we have seen further evidence of bulls lurking in small caps.
In Direxion Daily Small Cap Bull 3X (NYSEArca: TNA), trading volume has been above average in two of the last three sessions and the fund took in nearly $200 million this week via creations, which equates to approximately 20% of the overall assets in the fund.