In '06, Small Cap Outperformed Large-Cap Again

The small-cap Russell 2000 Index made a comeback in 2006 with a gain of 18.4%, outperforming the large-cap Russell 1000 Index (15.5%) for the seventh year in the past eight years. “The Russell 1000 and Russell 2000 each outperformed the other for six separate months through the year, but in the end the Russell 2000 proved more resilient in their back-and-forth struggle,” said David Hintz, senior manager research analyst, in a statement.

In fact, each of Russell’s 26 U.S. equity indexes reflected a positive return. A slightly positive month for equity returns in December pushed the Russell 3000 Index to an increase of 15.7% for 2006 and the Russell 2000 Value Index to a 23.5% gain for the year. Additionally, value stocks at each capitalization tier performed notably better than their growth counterparts, Russell noted. The performance gap between the large-cap Russell 1000 Value Index and the large-cap Russell 1000 Growth Index was 13.2 percentage points, and it was 10.1 percentage points in the small-cap area.