On the other hand, larger companies have to contend with decelerating growth in major overseas economies. Moreover, the companies do not benefit as much from falling prices of oil as compared to small-caps.
This year’s underperformance may also be just a minor blip in the small-cap’s long-term performance. According to Barclays, a $100 portfolio of small-caps in 1926 would be worth $1.4 million as of the end of 2012, whereas it would only be worth $200,000 if it were a large-cap portfolio.
iShares Russell 2000 ETF
For more information on small-capitalization stocks, visit our small-cap category.
Max Chen contributed to this article. Tom Lydon’s clients own shares of IWM.