Sunday, September 16, 2007

A Shift in the Style Box

If you click on the chart above, you'll see a detailed view of 2007 performance for four Vanguard style indexes: small cap growth (VBK), small cap value (VBR), large cap growth (VUG), and large cap value (VTV).

The laggard over the course of the year has been value, with small cap value actually in the red for the year.

Since July, however, we've seen a style shift. Here's how the indexes have fared since their July peak:

VBK: -6.16%
VBR: -8.84%
VUG: -3.08%
VTV: -4.68%

Clearly small caps have underperformed large caps during the recent market turmoil. One possible reason is that a weaker dollar is more likely to benefit multinational companies with a significant proportion of sales overseas. These are more likely to be found in the large cap universe.

In my next post, we'll examine returns across the style cube.


My Last Look at the Style Box

From Style Box to Style Cube