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● The S&P 100 is an index containing very large-cap stocks.
● The Russell 2000 is a small-cap index.
● The two indexes have had similar performances since 1987.
The presumption that small-caps outperform large-caps is not hard to find in the financial press. Granted, small-caps
have been strong since 2000. But do small-caps deserve the honor they have received? What is generally assumed
to be true, often isn't.
S&P 100 history goes as far back as the seventies. Available Russell 2000 data begins 9/10/87, so our analysis
begins on that date and extends through 2006. During that period the Russell 2000 has gained .58% more per
year from capital appreciation than the S&P 100. However, the current dividend yield for the S&P 100 is,
coincidentally, .58% higher than the Russell 2000. The nineteen year record appears to be a draw.
Standard & Poor's 100 Index (OEX) is an unmanaged,
market-capitalization weighted index of 100 stocks
from a wide range of industries. The components of the
S&P 100 are generally the larger members of the S&P
500 index and include all 30 components of the Dow
Jones Industrial Average.
1987 2000 2006
Both indexes are plotted in Logarithmic scale.
The Russell 2000 (RUT) is an unmanaged, market-capitalization weighted index for small-cap
stocks. It contains the 2,000 smallest companies in the Russell 3000 Index, which is made up of
3,000 of the largest U.S. stocks.
The largest 200 of the Russell 2000 stocks have a combined market-cap of $430 billion, roughly
equal to the market-capitalization of Exxon Mobil (XOM). The median market-cap is 600 million
for the Russell 2000, 16 billion for the S&P 500 and 49 billion for the S&P 100.
|Do Small Stocks Outperform Large Stocks?
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