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The Winners and Losers of U.S. Equity Funds in 2014

It was a great year for Primecap and a bad one for Fairholme.

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It's been a fine year to be in large caps. Although small caps have had the upper hand in most of the past 10 years, that hasn't happened in 2014. The average large-blend fund gained 9% compared with 0.3% for small blend and 5% in mid-blend. (Figures are through Dec. 10, 2014.) Why the difference? Valuation is certainly one part of the story. Many years of outperformance left small caps looking pricey by many measures. GMO's Ben Inker said at our June conference that he wouldn't touch small caps with a 10-foot pole and he may have been on to something.

Growth versus value was more or less an even draw, though value was a more treacherous place to be as the industry look below explains.

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Russel Kinnel has a position in the following securities mentioned above: FAIRX. Find out about Morningstar’s editorial policies.