Investors chasing the phenomenal returns delivered by the U.S. technology mega caps have wrought havoc on small cap stock prices, opening up a massive gulf in percentage terms between the S&P 500 and the Russell 2000 indexes.
Data compiled by the Financial Times suggests that the Russell 2000 Index of small cap stocks is on its worst run relative to the S&P 500 seen in 20 years as investors struggle to see beyond the themes of big tech, with companies such as Nvidia Corporation (NASDAQ:NVDA), Broadcom Inc (NASDAQ:AVGO) and AMD (NASDAQ:AMD) enjoying triple digit gains over the past three years.
Over the same three-year period, the S&P 500 index has returned 31%, while the Russell 2000 has lost 6.8%.
The exchange traded funds that track these two indexes have put in similar performances, with the SPDR S&P 500 ETF (NYSE:SPY) up 31% and the iShares Russell 2000 ETF (NYSE:IWM) down 7%.