A Snapshot of U.S. Styles/Market Caps

Bob Carey
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A Snapshot of U.S. Styles/Market Caps

Posted Under: Themes

View from the Observation Deck

Today's blog post is intended to expose potential opportunities within the growth and value styles of investing, as well as by market capitalization (market cap).
At any given time, the equities markets are likely being led up or down by one of the three market cap classifications (large-cap, mid-cap or small-cap). Often this leadership role can be held for a multi-year period.
From 1995-1999, large-cap stocks outperformed their mid- and small-cap counterparts by a sizable margin. From 2000-2012, mid- and small-caps outperformed large-caps by an even bigger margin.
From 12/31/12 through 8/7/18, small-cap stocks performed the best. The S&P 500, S&P MidCap 400 and the S&P SmallCap 600 Indices posted cumulative total returns of 125.00%, 115.21% and 140.14%, respectively, according to Bloomberg.
Growth stocks have the edge year-to-date through 8/7/18 (see table), with the S&P SmallCap 600 Growth Index as the top performer. Growth stocks also outperformed value stocks in each of the three respective market caps in 2017, according to Bloomberg.
All six indices have 2018 and 2019 consensus estimated year-end P/E ratios below their respective three-year averages as of 8/8/18.

This chart is for illustrative purposes only and not indicative of any actual investment. The illustration excludes the effects of taxes and brokerage commissions and other expenses incurred when investing. Investors cannot invest directly in an index. There can be no assurance that any of the projections cited will occur. The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks (currently 505) used to measure large-cap U.S. stock market performance. The S&P MidCap 400 Index is a capitalization-weighted index that tracks the mid-range sector of the U.S. stock market. The S&P SmallCap 600 Index is a capitalization-weighted index that tracks U.S. stocks with a small market capitalization. The Growth and Value sub-indices of the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices are designed to measure the performance of growth stocks and value stocks, respectively, within the S&P 500, S&P MidCap 400 and S&P SmallCap 600 indices.

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Posted on Thursday, August 9, 2018 @ 2:38 PM • Post Link

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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.

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