In the boom-and-bust world of small-cap stocks, this has been the bust part.
The Russell 2000 Index, once the bull market?s star, has seen its shine dim amid a three-month decline that has shaved almost 5 percentage points off its annual return since March 2009. The gauge, down 13 percent since early July, has fallen for six weeks, the longest slump since 2005. It?s up 68 percent since the end of 2009, versus a 71 percent gain in the S&P 500.
Not since the bursting of the dot-com bubble, when investors poured money into computer giants such as Cisco Systems Inc. and Microsoft Corp., have small-cap shares trailed their larger counterparts over a comparable stretch. Money is moving away on concern valuations are too high amid slowing global growth and declining stimulus from the Federal Reserve.
?If you?re taking more risk, you want more reward,? Richard Sichel, chief investment officer at Philadelphia Trust Co., which oversees $2 billion, said in a phone interview. ?When that isn?t delivered, you want something with less volatility. The comfort level continues with more established companies with more predictable earnings and good dividends.?
The Russell 2000 lost 4.7 percent last week, amid a global selloff after the International Monetary Fund cut its forecast for worldwide economic growth and said the euro area faces the risk of a recession.
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