Small Caps Getting Killed In 2016

It’s been a rough 2016 so far for most global financial markets, as fears surrounding China’s economy has dragged down stock and commodity prices across the board. However, small cap stocks have been hit particularly hard.
 

Less than halfway through the first month of 2016, the SPDR S&P 500 ETF Trust SPY is already down 5.3 percent year-to-date. However, the iShares Russell 200 Index (ETF) IWM is down a staggering 8.6 percent so far this year.
 

Related Link: Jefferies Lowers Oil & Gas Price Forecasts
 

“To this point, geopolitical unrest and disappointing data out of China has overwhelmed any January effect buying, which sometimes buoys the Small Caps at the beginning of the year,” Kevin Davitt of CBOE explains. Davitt notes that the only positive for small cap investors is that the relative lack of volatility indicates an orderly, rather than panic-driven, selloff.
 

Small Cap investors were hoping for a bounce-back year in 2016 after the IWM declined more than 5.3 percent in 2015.

Disclosure: the author holds no position in the stocks mentioned.