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.
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.