In March, Standard & Poor’s investment strategist Sam Stovall predicted that small-cap stocks may have reached their pinnacle. While one month does not make a trend, the category lost 0.1% in April as represented by the price change on the S&P SmallCap 600. Still, small-cap stocks in the index have surged 12.5% year-to-date following a robust first quarter advance. In comparison, the S&P MidCap 400 has risen 8.8% for far this year, and the S&P 500 is up 5.0% on a price basis.
In terms of fund categories, large-cap value funds were the standouts for in April, rising 2.1% as dividends helped boost returns. The all-cap value category rose 1.6%, while mid-cap value funds gained 1.3%. Small-cap growth funds were the weakest of the bunch, edging just 0.2%, while small-cap blend funds managed a 0.6% uptick. Small-cap value funds, which have enjoyed strongreturns over the past six years, rose just 0.8% in April.
Standard & Poor’s Global Investment Policy Committee believes that strong earnings, a mid-year end to the Fed’s rate-tightening program, and the reduction in shock value associated with oil trading above $70 per barrel will allow investors to remain optimistic about the price appreciation potential for U.S. equities. The Committee predicts a full-year price advance of 9.0% for the S&P 500.
Fund Investment Style |
April 2006 Average Returns (%)* |
Large-Cap Growth |
+0.4 |
Large-Cap Value |
+2.1 |
Large-Cap Blend |
+1.3 |
Mid-Cap Growth |
+0.4 |
Mid-Cap Value |
+1.3 |
Mid-Cap Blend |
+1.0 |
Small-Cap Growth |
+0.2 |
Small-Cap Value |
+0.8 |
Small-Cap Blend |
+0.6 |
All-Cap Growth |
+0.9 |
All-Cap Value |
+1.6 |
Domestic Equity Funds (excluding sector and balanced funds) |
+1.0 |
S&P 500-Stock Index |
+1.3 |
*Source: Standard & Poor’s. Total returns include reinvested dividends. Preliminary data as of 4/30/06.