Long Term Perspective

Small cap stocks have historically shown greater returns than large cap stocks. This is a new index to the S&P family, but the Russell 2000 has a longer history and also measures the small cap sector. In contrast to the S&P 500, the small cap index posted gains in 2000 and 2001.

Short Term Perspective

Just like the S&P 500 and the Midcap, the Smallcap index includes industrials, utilities, financials and transportation. A larger portion of the companies in this index is from the Nasdaq (41 percent) than for the other two index measures. The financial crises hit the small cap sector in 1998. Moderate gains were recorded in subsequent years including 2001, but not 2002.

As did the larger capitalization indexes (the S&P 500 and the Midcap), the Small Cap index rose modestly in October, but recorded a larger gain in November. This market segment has performed a bit better than its larger-capitalization counterparts as the index rose for seven of the past 12 months.