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Small-Cap Value Comes Back--But Not All the Way

It's too soon to tell whether small-value's November resurgence will endure.

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Small-cap value has surged back in the fourth quarter, but it still has a long way to go to recoup years of relative underperformance. The Russell 2000 and Russell 2000 Value indexes rose 18.4% and 19.3%, respectively in November, their best absolute gains since their December 1978 inceptions. The Russell 2000 Growth Index, however, posted a strong 17.6% rise itself and remained far ahead of both its sibling benchmarks for the year and over longer trailing periods through November. The Russell 2000 Value’s paltry 0.8% annualized trailing three-year gain through month's end, for instance, trailed the Russell 2000 Growth Index’s advance by 12 percentage points.

Still, many investors wonder whether November’s sharp value rally signals a sea change. The answer is maybe. It’s too soon to tell.

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Linda Abu Mushrefova does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.