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Style Box Update: Small And Mid-Cap Value Outperforming Large-Cap Growth

Published 02/17/2019, 11:11 PM
Updated 07/09/2023, 06:31 AM

YTD Returns

The bounce in the various U.S. equity asset classes since Dec. 24 and Dec. 26, is resulting in the small and mid-cap sectors within the SP 500 (NYSE:SPY) outperforming large-cap and growth for the first time in – well – a while.

If readers would look at the attached spreadsheet, the last time we saw small and mid-cap “value” outperform “growth” was 2016.

Will this last ?

It’s hard to say.

Summary and conclusion: The dramatic ‘style” out-performance by large-cap growth since the last correction in Q1 2016, might be coming to an end. The plan is to keep readers updated usually every six weeks at the end of each quarter and then mid-quarter, but the returns aren’t always posted in a timely fashion.

Here is the thing though for readers: with every substantial correction in the SP 500, typically the ensuing rally is always somehow different than the rally prior to the correction. Just look at the Energy sector.

The Energy sector was 14% – 15% of the SP 500 by market cap as of August, 2014 and then came the collapse in the price that eventually bottomed in Q1 2016 near $28 per barrel, but Energy’s market cap as a percentage of the SP 500 hasn’t gotten anywhere close to that 14% – 15% weight.

With every correction, each ensuing bull market rally is always somewhat different in nature, leadership, etc.

Small and mid-cap value have been in the penalty box for the last few years. Will they now lead again ?

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