Small cap stocks across a range of global regions outperformed their large cap counterparts in 2013 and many have continued this trend in 2014 as of 7 January.
In Europe, the Russell Developed Europe Small Cap Index outpaced the Russell Developed Europe Large Cap Index by more than 10 per cent in 2013. As of 7 January, there was a 1.5 per cent difference.
In the US, the small-cap Russell 2000 Index outpaced the large-cap Russell 1000 Index by more than five per cent in 2013 and the indices were even year-to-date as of 7 January.
Globally, the Russell Global Small Cap Index outperformed the Russell Global Large Cap Index in 2013 and has continued to outperform in 2014 as of 7 January. Small caps have also outperformed for these same time periods in emerging markets as reflected by the Russell Emerging Markets Index.
“The global large cap segment of equity market has become more highly correlated due in part to those companies diversifying their revenues and supply chains globally. The diversification and growth potential offered by international small cap investing has become a logical extension and possibly an under-explored area of potential opportunity for many global multi-asset investors. Russell’s global indexes provide a globally consistent delineation between large caps and small caps across regions and countries, which provides investors with accurate and reflective indexes to measure and analyse these investment opportunities,” says Mat Lystra, index research analyst with Russell Investments.