Small Cap ETFs Among the Week’s Top Performers

The S&P 500 was up 2.35% over the week bringing its year-to-date (YTD) performance to 15.91%. This strong performance was mainly driven by a handful of mega-cap stocks, namely Apple, Microsoft, Alphabet-Google, Amazon and Nvidia, which together held up the performance of the benchmark index to an exceptional degree. For context, these five stocks are responsible for more than 80% of the overall index return despite accounting for only 22% of its allocation.

In contrast, small-cap stocks have underperformed significantly compared to large-caps over the past few months. The Russell 2000 index is up 7.24% YTD but it’s worth noting that half of this performance was realized in the last week of June (+3.68%). Is this a tipping point?

According to Goldman Sachs strategist Lily Calcagnini, small cap stocks are trading at a discount in comparison to the large-cap market segment. Her view is that while the S&P500 should continue to grow and hit 4,700, the Russell 2000 could outperform its large cap peers by 5% in the meantime.

After this release, small-cap stock ETFs gained 3.73% on average week-over-week. The Vanguard Small Cap ETF (VB) collected nearly $175 million in net inflows and gained 4.32%, while the iShares Core S&P Small-Cap ETF posted a net gain of 4.36% and registered net inflows of almost $98 million over the week.