2024 Calendar Performance: Momentum and Large-Cap Growth Dominate
When it comes to the race for 2024 calendar performance, the clear winners are momentum and large-cap growth factors. These investment strategies have been outperforming the rest of the field by a significant margin, as evidenced by a set of ETFs through Tuesday’s close (Oct. 29).
Top Performers
- The iShares MSCI USA Momentum Factor ETF (NYSE:) and iShares S&P 500 Growth ETF (NYSE:) are leading the pack this year, with impressive year-to-date gains of 32.0% and 31.5%, respectively.
- These returns far exceed the broad market’s 23.6% rise so far in 2024, as indicated by SPDR S&P 500 ETF (NYSE:).
It’s important to note that while all main risk factors for the US equities market are showing gains this year, the range of results varies significantly. Small-cap value stocks, for example, have only seen a modest 5.5% increase, lagging behind other factors.
Small-Cap Struggles
All three categories of small-cap stocks (growth, core, and value) are currently in last place for the 2024 factor horse race. Despite recent optimism that small-caps would make a comeback, they continue to underperform large caps in recent market action.
Cliff Asness of AQR Capital Management has reiterated his belief that the size premium, also known as the small-cap effect, is no longer a viable investment strategy. His firm’s research suggests that there never truly was a size effect when compared to market beta.
Based on this year’s lackluster performance in the small-cap segment, it seems that the market is aligning with Asness’s assessment.
Analysis and Implications
For investors, the dominance of momentum and large-cap growth factors in the 2024 performance landscape highlights the importance of staying attuned to market trends and adjusting investment strategies accordingly. The underperformance of small-cap stocks serves as a reminder that not all segments of the market will deliver the same returns.
Understanding the factors driving market performance can help investors make informed decisions about their portfolios and position themselves for success in the ever-changing financial landscape. By recognizing the strengths and weaknesses of different investment strategies, individuals can build a diversified portfolio that is well-equipped to weather market fluctuations and capitalize on opportunities for growth.