While the 2020 picture looks promising for US small-cap equities, according to market experts at FTSE Russell and Cboe, a number of risks still lurk on the horizon for investors.
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Vaccine-fueled hopes for a quicker return to economic normalcy ignited a powerful rotation in Q4 away from long-dominant Quality and Momentum into Value and (smaller-cap) Size factors hit hardest by the pandemic shock since last March.
After a Q4 sprint that puts US small-cap stocks virtually even with US large-cap stocks for 2020 in terms of full-year performance (a 21% rise for the US large-cap Russell 1000® Index relative to a 20% rise for the US small-cap Russell 2000® Index), this asset class continues to rise in the early days of 2021.
As of December 31, 2019, there were $5.7 trillion of active strategies using Russell US Style Indexes as performance benchmarks, and $466 billion using them as the basis for passive investment, for a total of $6.2 trillion in benchmarked assets.
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