Small Caps Leading
Since the stock market lows of mid-March 2020, Small-Cap Stocks have been on a tear relative to Large-Cap Stocks. To explore the point, we graphed the following ratio: VB / VV with 10-years of data. VB is the Vanguard U.S. Small-Cap ETF and VV is the Vanguard U.S. Large-Cap ETF. The ratio demonstrates their relative performance.

Since the closing low on 23 March 2020, the VV U.S. Large-Cap ETF has appreciated 76.8% (to 12 January 2021). The VB U.S. Small-Cap ETF has appreciated by 112.3%. The difference is stark: Small-Caps have out-performed Large-Caps during the market recovery by a whopping 35.5%.
Small Caps Out-Pacing Technology Stocks Too!

Next, we compared the U.S. Small-Cap ETF to the tech-heavy NASDAQ-100 Index ETF from Invesco (QQQ), over the same period. The results may surprise you! Small-Cap Stocks have outpaced the tech-heavy NASDAQ-100 Index by 27.5%. Since the close on 23 March 2020, the QQQ is higher by 84.8% (vs. 112.3%).
Exchange-Traded Fund | Performance: 3/23/20 – 1/12/21 | Difference |
VB – Vanguard U.S. Small-Cap | 112.3% | |
VV – Vanguard U.S. Large-Cap | 76.8% | -35.5% |
QQQ – Invesco NASDAQ-100 | 84.8% | -27.5% |
On the way to the lows in March, investors suffered the swiftest sell-off in modern history: Small caps sold off 42%, Large-Caps sold off 34% and Tech Stocks sold off 28%, all in a month. If you stayed invested, you made-out OK. From the highs in February 2020 to yesterday’s close, QQQ (NASDAQ-100) is higher by 33.2%, while VB (Small-Caps) is higher by 23.0% and VV (Large-Caps) is higher by 16.2%. While it pays to stay invested, the swings can be a challenge.
Finally, we calculated the Volatility of the 3 ETFs over the past 12-months (252 days) and 5-Years (1,260 days). The recent volatility figures are nearly twice the long term averages, confirming that the past year has truly been a wild ride!
Exchange-Traded Fund | Performance: Feb. 2020 to 1/12/21 | 12-Month Volatility* | 5-Year Volatility* |
VB – Vanguard U.S. Small-Cap | -42.0% | 39.3% | 22.0% |
VV – Vanguard U.S. Large-Cap | -34.3% | 34.4% | 19.1% |
QQQ – Invesco NASDAQ-100 | -28.0% | 35.8% | 22.0% |
Notes:
12-Month and 5-Year volatility are the annualized standard deviation of daily returns over the periods.
All performance figures are Total Return, and assume the re-investment of dividends.