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Monday, February 7, 2022
Bigger isn’t always better.
Case in point: Lots of trading desks are locked in on the dramatic underperformance of the small-cap Russell 2000 Index amid the bounce-back in broader stocks from the late January lows. The Russell 2000 — which is often viewed a proxy for the strength (or lack thereof) of the domestic economy — is down 10.5% this year compared to a 6% drop for the S&P 500 and 3.6% decline for the Dow Jones Industrial Average.
The Russell 2000 has lagged the S&P 500 by 25 percentage points in the past 12 months, its worst 12-month relative return since 1999, notes Goldman Sachs’ David Kostin.
“Decelerating GDP growth has been one headwind to the cyclical small-cap index. During the last 20 years,…
