Small Cap keeps outperforming Large Caps
By:
Sami Thursday, September 04, 2008 4:01 PM
The Russell 2000, small cap index, has outperformed large indexes on YTD basis and on a year-over-year basis.
Russell 2000 YTD returns :-5.57%
Dow Jones YTD returns: -15.47%
S&P 500 YTD returns: -15.59%
Russell 1000 index, Large cap index, YTD returns: -14.59%
That is really surprising because typically small cap stocks are not international and would be hurt the most in a credit crunch, as banks would not lend to them due to their higher risk profile. What is more surprising is small cap index is weighted more to out of favour sectors like consumer discretionary and financial services, see table comparison:
| Russell 2000 | Russell 1000Sector |
| 15.74% | 12.03% | Consumer Discretionary |
| 2.82% | 8.14% | Consumer Staples |
| 21.06% | 17.02% | Financial Services |
| 13.94% | 12.82% | Health Care |
| 9.11% | 5.08% | Materials & Processing |
| 5.96% | 6.09% | Other Energy |
| 8.27% | 5.29% | Producer Durables |
| 13.61% | 13.20% | Technology |
| 4.46% | 7.32% | Utilities |
Over the long term typically small cap outperform large cap by a good margin but in this type of market I am very surprised to see this out performance.
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