Additionally, both the brief rally and the quarter as a whole were dominated by lower-quality small-caps: Companies with negative earnings before interest and taxes (EBIT) outpaced those with earnings, while dividend payers underperformed non-dividend payers. Small-cap value lagging reversed the previous trend-prior to 3Q22, the Russell 2000 Value had beaten the Russell 2000 Growth for seven consecutive quarters. The Russell 2000 Value Index lost more than the Russell 2000 Growth Index in 3Q22, down 4.6% versus a gain of 0.2%.

These negative results were the second worst first nine months for both the small-cap index (by just a single basis point) and the large-cap index since their 1978 inception. Negative third-quarter performance contributed to near-record losses for the small- and large-cap indexes for the first nine months of a calendar year, as the Russell 2000 was down 25.1%, while the Russell 1000 fell 24.6%. So, while the MSCI ACWI ex USA Small Cap Index declined 8.4% in 3Q22, and the MSCI ACWI ex USA Large Cap Index slipped 9.9%, returns in local currencies showed smaller losses.

Outside the U.S., the ongoing downturn was more strongly in evidence, much of it tied to the sharp surge in the U.S. Past performance is no guarantee of future results.įor 3Q22 as a whole, the small-cap Russell 2000 Index was down 2.2%, ahead of its large-cap sibling, the Russell 1000 Index, which was down 4.6% for the same period. Unlike large-caps, however, small-caps did not reach a new low in 3Q22 as the 6/16/22 low held in spite the 17.5% decline for the Russell 2000 from 8/15/22-9/30/22.Ĭumulative Returns for the Russell 2000, 6/30/22-9/30/22 After equity prices moved downward in volatile fashion through the first six months of 2022, the third quarter saw a spirited, but ultimately short-lived, rally that ran through July and into mid-August before down days returned, negating its midsummer gains.

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