Please excuse the excel spreadsheet, but it’s the easiest way for me to track data and keep it logical. With no editorial department or publisher, I’m left with the task of updating the data, writing the blog post, and moving on to the next task.
Readers should note the recovery in “value” as of 9/30/22. Those YTD returns from last night needed to be re-checked. It was surprising even though crude oil has been relatively flat.
Also surprising was the outperformance of the “equal weight” relative to the weight of market cap. To cover market risk type 2001-2002, RSP was added to client accounts in 2020 and 2021, managing capital gains within taxable accounts, and by 31/12/21, RSP had entered the first 10 customer locations.
RSP has done its job this year exactly as hoped. Now waiting for the breakout in Russell 2000 (IWM) and in biotech was like Waiting for Godot, that is, much discussed, but never seems to arrive.
Two data points to note:
- Looking at the middle section of the spreadsheet, i.e. annualized returns, the growth of large caps (the first row) is still out of control in terms of above-average returns, with the rest of the value of large caps falling through the small caps valuable asset classes. While large-cap growth, which is really dominated by large-cap stocks, given their influence, large-cap growth could leak for ’23, even if other asset classes outperform.
- Also note S&P 500 (SPY) versus RSP and QQQ versus QQQE: While the SPY improved its YTD return by 8.8% from 10/30 to 10/15, the RSP improved its return by 11, 5%, so the RSP is outperforming in both up and down periods this year. QQQ improved its yield by 559 basis points from 9/30/22 to 11/15, while QQQE increased 9.38% or 938 basis points.
Summary/Conclusion: It had long been predicted that the “non-large-cap growth” asset class would eventually assert itself in terms of market leadership and return to the average (so to speak), but in 2022 it fared less badly than the S&P 500 and the mega- limiting equity space, rather than positive returns, but that’s all 2022 really on offer in US domestic, international and emerging markets. Everything was bad in 2022 (so far) except energy.
The sudden dollar weakness has generated good volume in some of the EM ETFs like EMXC and the Vanguard ETF like VEU, which is the FTSE All-World Ex-Us ETF. The dollar looks broken as this Bespoke chart from yesterday indicates. Pay close attention to your favorite non-US, international and emerging market funds and ETFs.
The International has lagged in terms of returns for some time, looking at the asset class as a whole.
Take all of this with substantial skepticism. Past performance is no guarantee of future results. While the stylebox update comes every 6 weeks, it may contain a different emphasis each time. This information and data may be out of date.
Thanks for reading.
Editor’s note: The summary points for this article were chosen by the editors of Seeking Alpha.