DFEV - Looking Under The Hood Of Recent Global Small- And Large-Cap Performance

2024-04-05 14:50:00 ET

Summary

• The relative performances of large-cap equities to small-caps in developed and emerging regions have tracked one another for the better part of the last decade. However, around early-2021 they began to diverge.
• The sharp shift in recent performance of the FTSE Emerging Large Cap Index may be largely explained by country-specific factors, rather than a broad-based pullback in large-cap performance in the region.
• The evolution and composition of indices provides a starting point for thinking about the potential drivers of index performance in the future.

By Mark Barnes, PhD & Indhu Raghavan, CFA

The relative performances of large-cap equities to small-caps in developed and emerging regions have tracked one another for the better part of the last decade. However, around early-2021 they began to diverge. Since then, developed large-caps have outperformed their small-cap counterparts, while in the emerging region, large-caps steeply underperformed small-caps (Exhibit 1).

Exhibit 1: Large-Cap/Small-Cap Relative Return, Developed And Emerging (Rebased, USD) ...

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