The first quarter of 2020 was one for the ages—as in, it certainly aged a lot of investors. After building off the strength of 2019 in January, the major U.S. indexes got hit near the end of February through March with a panic sell-off, but large cap equities were able to blunt the impact of the downturn better than small caps.
“Nearly 60% of all large-cap managers beat their Russell 1000 benchmarks during the turbulent quarter, Bank of America analysts said Friday, the best outperformance rate since the 2008 financial crisis. The average fund sank 19.5%, while the broad index tumbled 20.2%,” a Markets Insider report noted.”
“The group of managers focusing on growth stocks had the most winners through the first quarter, with 64% outperforming the corresponding Russell 1000 Growth Index,” the report said further. “Value managers had the smallest proportion of winners and posted an average return slightly below the related index.”
For investors looking for continued upside in large cap equities over small caps, the Direxion Russell Large Over Small Cap ETF (NYSEArca: RWLS) offers them the ability to benefit not only from large cap equities potentially performing well but from their outperformance compared to their small cap brethren.
RWLS Fund Facts:
- The Russell 1000®/Russell 2000® 150/50 Net Spread Index (R1R2NC) measures the performance of a portfolio that has 150% long exposure to the Russell 1000® Index (the “Long Component”) and 50% short exposure to the Russell 2000® Index (the “Short Component”).
- On a monthly basis, the Index will rebalance such that the weight of the Long Component is equal to 150% and the weight of the Short Component is equal to 50% of the Index value.
- In tracking the Index, the Fund seeks to provide a vehicle for investors looking to efficiently express a large-capitalization over small-capitalization investment view by overweighting exposure to the Long Component and shorting exposure to the Short Component.
Another fund to consider as Q1 earnings data will soon come to the forefront is the WisdomTree U.S. Earnings 500 Fund (NYSEArca: EPS). EPS seeks to track the price and yield performance, before fees and expenses, of the WisdomTree U.S. LargeCap Index.
Under normal circumstances, at least 95% of the fund’s total assets (exclusive of collateral held from securities lending) will be invested in component securities of the index and investments that have economic characteristics that are substantially identical to the economic characteristics of such component securities. The index is a fundamentally weighted index that is comprised of earnings-generating companies within the large-capitalization segment of the U.S. Stock Market.
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