Taking a look at the domestic market, small-capitalization stocks have outperformed large-caps for the past six years.  Thus far in 2006, the small-cap lead continues.  Small-caps tend to do better when an economy is expanding and have stronger earnings growth.

Many of the small-cap exchange traded funds hit new highs this week creating a bigger gap between the large-caps.  iShares Russell 2000 Index (IWM), which represents the small-cap sector of the U.S. equity broad market, is up 7.9% for 2006, while the S&P 500 is up 1.8%.

Iwm

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.

Subscribe to our free daily newsletters!
Please enter your email address to subscribe to ETF Trends' newsletters featuring latest news and educational events.