It was on Christmas eve of 2018 when the markets experienced a precipitous drop that rattled investors during the holidays and while major indexes have been hitting record highs in 2019, small cap indexes like the Russell 2000 are still playing catch-up.

“Some U.S. stock indexes remain stuck below records despite notching some of their biggest gains in years, underscoring the extent of last year’s turbulent fourth-quarter selloff,” a Wall Street Journal report noted. “The Russell 2000 index of small-cap stocks and the Dow Jones Transportation Average are both on pace to end 2019 without hitting a single record this year. The Russell remains about 4% short of its August 2018 record—despite gaining 24% this year—while the Dow transports lag its September 2018 milestone by 5.8% after rebounding 19% this year.”

Small cap equities were also susceptible to the U.S.-China trade war news going on for much of 2019, while large caps were able to effectively mute the volatility. On the flip side, when markets were roaring on the tailwinds of a “phase one” trade deal, large caps were also able to churn out more gains as a whole versus their smaller cap brethren.

For investors looking for continued upside in large cap equities over small caps in 2020, 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 features:

  • The Index 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.

Conversely, if investors believe that small cap equities will outperform large cap equities, the Direxion Russell Small Over Large Cap ETF (NYSEArca: RWSL) provides a means to not only see small cap stocks perform well, but a way to capitalize on their outperformance versus their large cap brethren.

For more relative market trends, visit our Relative Value Channel.

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