Small-Cap Index Funds Have Delivered Surprisingly Strong 12-Month Returns. Here's What That Means for Investors.
Recent performance of small-cap index funds proves that mega-cap stocks don't drive the market by themselves.
Overview
Challenging the belief that only mega-cap stocks drive the market, small-cap index funds have quietly delivered impressive 12-month returns, with small-cap index products posting excellent trailing one-year results across major markets. For example, as of June 26, the State Street Small-Cap SPDR ETF (NYSEMKT: SPSM) -- a fund tracking the S&P SmallCap 600 -- had delivered a 36.9% trailing 12-month total return.
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In a world where giants like Apple, Microsoft, and Nvidia are leaders, it may be difficult to understand why crowds would be drawn to diversify their portfolios by adding small-caps. Common reasons include:
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Originally published at www.fool.com.