By Tom Burnett CFA
As we near the halfway point in the year, we continue our review of the primary investment styles. We have seen the clear outperformance of growth stocks over value styles and, in this report we will review the comparative performance of large cap and small cap stocks. The price and returns data are from Morningstar with prices based on the close as of June 22, 2020.
For the large cap proxy, we will use the S/P 500 Index ETF with the symbol SPY. We use the S/P Small Cap 600 ETF with a symbol of SLY to capture the smallest stocks in the S/P 1,500. In addition, we will look at the micro cap segment represented by the Russell Micro Cap Index—IWC. The IWC covers the smallest stocks in the Russell 2000 Index.
Looking at the performance returns over the past ten years gives us a clear picture of the superior performance of the large cap stocks. So far in 2020, the SPY is down 3.5%, well ahead of the two small cap proxies. The SLY is down 19.1% and the IWC is down 12.6% so far in 2020. The comparisons also show a similar picture over the three, five, and ten year periods. For example, the ten-year return for the SPY is 13.0%, compared to 10.5% for the SLY and 9.1% for the IWC security. There is little doubt that over the past ten years and, continuing into 2020, large cap stocks have outperformed their small cap competitors.
Tom Burnett CFA is Director of Research