The Re-Emergence of US Small Cap Equities in 2017

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After spending much of the year within a tight sideways consolidation, small cap equities have re-emerged as one of the leaders in the market and the recent rally within the group has helped propel US Equities to new all-time highs. Often thought of as a market leader in terms of risk sentiment, many market participants have been wondering if small cap stocks underperforming thus far into the year was a possible red flag for a steep market correction as we head into Q4. However, the sharp rally to new all-time highs in a number of widely followed US Small Cap Indexes may have eased these fears. Furthermore, the VIX Index has continued to tread water near record lows below 10.00. A healthy rotation has helped a number of Small Cap Indexes break out of these choppy ranges and spur an impressive rally off the August lows.

After finding a bottom in late August, the Nasdaq Chaikin Power US Small Cap Total Return Index (NQUSCHKTR) is now over 14% off the lows and up roughly 10% YTD (as of 10/2/17). From the first week in September at the latest rally, the Nasdaq Chaikin Index has been outperforming the Russell 2000 Total Return (RUTTR) consistently with a return of 12.7% vs 8.1%.

Chart 1 of Reemergence of Small Cap

On a longer term basis (March 30, 2001 - December 30, 2016), the Nasdaq Chaikin Power US Small Cap Total Return Index has displayed impressive outperformance above the Russell 2000 Total Return Index and has done so on basically the same level of volatility.

Table Reemergence of Small Cap

Chart 2 of Reemergence of Small Cap

After starting the year off in a narrow range, the Nasdaq Chaikin Power US Small Cap Index has displayed impressive performance over the last six weeks. On a longer term time frame the Nasdaq Chaikin index displayed the ability to outperform other popular Small Cap Indexes (such as the Russell 2000 Total Return Index).

Investors can gain access to this index through the corresponding ETF the IQ Chaikin Small Cap ETF (CSML).

For more information on the Nasdaq Chaikin Power US Small Cap Total Return Index , please visit business.nasdaq.com/indexes or click here and a member of our team will contact you.


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© 2017. Nasdaq, Inc. All Rights Reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: News Headlines , MarketInsite

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