Last year, we published a whitepaper on The Conundrum of Value, looking at the long-term potential for factors of return such as Value and Small to outperform. This belief was backed by decades of academic research, which demonstrated the potential for these factors to rebound, regardless of earlier periods of underperformance.
Starting in November, 2020, we started to see encouraging signs. Then, in the first quarter of 2021, both Value and Small did exceptionally well.
In fact, Value enjoyed its best quarter in 20 years, with the Russell 1000 Value Index up 14% versus an 8.2% gain for its growth counterpart.
Small stocks enjoyed an even stronger quarter, with the MSCI US Small Cap 1750 Index, returning 30.45%.
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All indexes have certain limitations. Investors cannot invest directly in an index. Indexes have no fees. Historical performance results for investment indexes generally do not reflect the deduction of transaction and/or custodial charges or the deduction of an investment management fee, the incurrence of which would have the effect of decreasing historical performance. Actual performance for client accounts may differ materially from the index portfolios.
Russell 1000 Value TR USD: The index measures the performance of the large capitalization value sector of the U.S. equity market.
MSCI US Small Cap 1750 GR USD: Represents the universe of small capitalization companies in the US equity market. The index targets for inclusion 1,750 companies and represents, as of October 29, 2004, approximately 12% of the capitalization of the US equity market. Index provided by Morningstar Direct.