The outperformance of US large caps over their small-cap peers that began last June persisted through the March 2020 turmoil, underpinned by the extreme investor run for safer ground. The Russell 1000 fell 20.2% in Q1 2020, versus a drop of 30.6% for the Russell 2000. While both indexes enjoyed sharp rebounds in late March, only the Russell 1000 is back in positive territory for the longer term (up 4.9% since January last year). The Russell 2000 remains deeply in the red (down 12.9% for the same period).
An initial analysis of high frequency data suggests that the world economy is going to experience a recession in first half of 2020 with some hope that the second half may improve given data related to China is starting to show stabilization and growth.
US investors have been licking their wounds from their overseas returns as the weakness in non-US currencies have significantly affected returns. The chart below, which compares global equity returns since the peak in global equity performance on February 19, highlights some divergence in performance between local currency and US dollar returns.