Russell 2000 Index Nears Strongest Relative Performance vs S&P 500 Since November

The Russell 2000 index is nearing its strongest performance relative to the S&P 500 since November. Small-cap stocks are at their highest levels since March compared to large-cap counterparts. The Russell 2000, which tracks the performance of small-cap stocks, is gaining strength and may indicate a shift towards smaller companies.

The Russell 2000 index, which tracks the performance of small-cap stocks, is nearing its strongest performance relative to the S&P 500 since November. As of Thursday, the Russell 2000 (NYSEARCA:IWM) has been mostly flat, yet it has gained 6.8% year-to-date, outperforming the S&P 500. This relative strength indicates a potential shift in investor sentiment towards smaller companies [1].

Small-cap stocks, in general, are currently at their highest levels since March relative to their large-cap counterparts. This trend is reflected in the Russell 2000 index, which has seen significant gains in several individual stocks. For instance, Offerpad Solutions (OPAD) has surged by 70.5%, Invivyd Inc. (IVVD) by 19.4%, and Phibro Animal Health (PAHC) by 19.1% year-to-date. These strong performances suggest that investors are finding value in smaller companies [1].

However, it is essential to note that small-cap stocks come with increased downside risk due to their limited Wall Street coverage and lack of scale compared to their larger counterparts. Investors should be cautious and conduct thorough research before making investment decisions. For example, Playa Hotels & Resorts (PLYA), Vicor (VICR), and Dentsply Sirona (XRAY) have shown signs of underperformance, indicating potential risks [2].

The Russell 2000 index's performance can be compared to the S&P 500 index using the S&P 500 - Russel 2000 portfolio. This portfolio has an expense ratio of -0.10%, which is considered low. Over the past 10 years, the Russell 2000 has returned 3.75% annually, while the S&P 500 has returned 12.54% annually [3].

In conclusion, the Russell 2000 index's recent performance relative to the S&P 500 suggests a potential shift in investor sentiment towards smaller companies. However, investors should be cautious and conduct thorough research before making investment decisions, considering the increased downside risk associated with small-cap stocks.

References:
[1] https://seekingalpha.com/news/4490163-top-gaining-russell-2000-stocks-as-index-close-to-strongest-performance-vs-large-caps
[2] https://finance.yahoo.com/news/3-small-cap-stocks-approach-043922536.html
[3] https://portfolioslab.com/portfolio/pcpfpydiq3uvwki88am5oo8b