Index IDEA: Small Caps Bloom In April

|
Includes: AMCA, DESC, DEUS, EQAL, FBGX, FIBG, FLGE, IWB, IWD, IWF, IWM, IWN, IWO, OMFL, OMFS, OMOM, OQAL, OSIZ, OVLU, OYLD, PPSC, ROLA, RWM, RYRSX, SCAP, SKF, SMLL, SPLG, SPSM, SRTY, TNA, TWM, TZA, URTY, USLB, UWM, VONE, VONG, VONV, VTWG, VTWO, VTWV, XUSA
by: FTSE Russell

US small cap stocks, as measured by the Russell 2000® Index, continue to outdistance US large caps, as measured by the Russell 1000® Index. The Russell 2000 has risen 2.9% in April against a rise of 2% for the Russell 1000 Index and has similarly outperformed for the past month and year-to-date. This reverses the prior trend of small cap underperformance.

Alec Young, managing director, global markets research, FTSE Russell:

"Several fundamental factors have driven small cap alpha in 2018. First, the Russell 2000 Index constituents' 20% international revenue exposure is much lower than large caps' overseas sales. Being more domestic helps small caps in several ways. Not only have they been less affected by geopolitical and trade fears, they're also more leveraged to newly enacted lower corporate tax rates and reduced Federal regulation. In addition, with Q1 earnings season off to a strong start, it's worth remembering that small caps have a higher earnings growth outlook than large caps. Wall Street's consensus 12-month forward earnings expectations for the Russell 2000 Index currently stand at 26% versus only 11% for the large cap Russell 1000 Index*."

* According to Thomson Reuters as of April 17, 2018.

Views expressed by Alec Young of FTSE Russell are as of April 19 and subject to change. These views do not necessarily reflect the opinion of FTSE Russell or the LSE Group.

© 2018 London Stock Exchange Group plc and its applicable group undertakings (the "LSE Group"). The LSE Group includes (1) FTSE International Limited ("FTSE"), (2) Frank Russell Company ("Russell"), (3) FTSE TMX Global Debt Capital Markets Inc. and FTSE TMX Global Debt Capital Markets Limited (together, "FTSE TMX"), (4) MTSNext Limited ("MTSNext"), (5) Mergent, Inc. ("Mergent"), (6) FTSE Fixed Income LLC ("FTSE FI") and (7) The Yield Book Inc. ("YB"). All rights reserved.

FTSE Russell® is a trading name of FTSE, Russell, FTSE TMX, MTS Next Limited, Mergent, FTSE FI and YB. "FTSE®", "Russell®", "FTSE Russell®", "MTS®", "FTSE TMX®", "FTSE4Good®", "ICB®", "Mergent®", "WorldBIG®", "USBIG®", "EuroBIG®", "AusBIG®", "The Yield Book®", and all other trademarks and service marks used herein (whether registered or unregistered) are trademarks and/or service marks owned or licensed by the applicable member of the LSE Group or their respective licensors and are owned, or used under licence, by FTSE, Russell, MTSNext, FTSE TMX, Mergent, FTSE FI or YB.

All information is provided for information purposes only. All information and data contained in this publication is obtained by the LSE Group, from sources believed by it to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, however, such information and data is provided "as is" without warranty of any kind. No member of the LSE Group nor their respective directors, officers, employees, partners or licensors make any claim, prediction, warranty or representation whatsoever, expressly or impliedly, either as to the accuracy, timeliness, completeness, merchantability of any information or of results to be obtained from the use of the FTSE Russell products or the fitness or suitability of the FTSE Russell products for any particular purpose to which they might be put. Any representation of historical data accessible through FTSE Russell products is provided for information purposes only and is not a reliable indicator of future performance.

No responsibility or liability can be accepted by any member of the LSE Group nor their respective directors, officers, employees, partners or licensors for (a) any loss or damage in whole or in part caused by, resulting from, or relating to any error (negligent or otherwise) or other circumstance involved in procuring, collecting, compiling, interpreting, analysing, editing, transcribing, transmitting, communicating or delivering any such information or data or from use of this document or links to this document or (b) any direct, indirect, special, consequential or incidental damages whatsoever, even if any member of the LSE Group is advised in advance of the possibility of such damages, resulting from the use of, or inability to use, such information.

No member of the LSE Group nor their respective directors, officers, employees, partners or licensors provide investment advice and nothing contained in this document or accessible through FTSE Russell products, including statistical data and industry reports, should be taken as constituting financial or investment advice or a financial promotion.

No part of this information may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission of the applicable member of the LSE Group. Use and distribution of the LSE Group data requires a licence from FTSE, Russell, FTSE TMX, MTSNext, Mergent, FTSE FI, YB and/or their respective licensors.