Interactive Investor

Top of the markets: US smaller companies outperform

6th January 2021 16:07

Tom Bailey from interactive investor


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In December, smaller-cap indices in the US outperformed, but for 2020 as a whole larger companies had the upper hand.   

US equities continued to generate gains in December, with the S&P 500 index ending the month up by 3.8%. The Dow Jones Industrial Average saw similar gains, returning 3.4%. These returns, however, were beaten by smaller-cap indices in December. Over the month, the S&P MidCap 400 returned 6.5%, while the S&P SmallCap 600 was up 8.3%.

Measured over the course of the whole year, larger companies had the upper hand. The S&P 500 returned more than 18%, beating both the S&P MidCap 400 and the S&P SmallCap 600, which returned 14% and 11%, respectively. However, the Dow Jones index still fell short of mid- and small-cap performance, returning 9.7%.

In terms of US factor indices, the S&P 500 Enhanced Value index saw the best return in December, at 4.4%. However, growth shares were not too far behind, with the S&P 500 Growth index returning 4%. That bought the growth index to a yearly performance of 35%. The enhanced value index ended the year down by around 10%.

When it came to S&P 500 sectors, financials saw the best monthly performance, returning 6.3%. This was followed by information technology, with a gain of 5.7%. Over the course of the year, information technology saw the best performance, returning 44%, followed by consumer discretionary with 33.3%.

In Europe, UK stocks pulled ahead of European stocks in December, with the S&P United Kingdom index returning 3.5% compared to the S&P Europe’s 350’s 2.4%. However, UK equities still underperformed, with the UK down 13% compared to the broad Europe index losing 2.8%.

Around half the S&P Europe 350 index ended the year with losses. Information Technology finished the year as the clear winner, with returns of more than 30%. Meanwhile, the worst performers were energy and financials, with losses of 33.5% and 15.2%.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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