Bloomberg Businessweek - USA (2020-05-04)

F I N A N C E

20

Edited by

Pat Regnier and

David Rocks

been frustrating stockpickers for some time. The

Russell 2000, a benchmark for small companies,

has lagged the big-name S&P 500 index badly over

the past two years. This year the small stocks, with a

median market valuation of about $525 million, have

lost 22% as of April 28; the S&P, about half of that.

The Nasdaq 100, which tracks the largest tech stocks,

is down less than 1%. The S&P 500’s companies now

make up 82% of the entire U.S. stock market’s value,

a share that’s been steadily rising this century.

None of that is good news for active fund

In a crisis, large companies can have an edge. As the

pandemic has forced the shuttering of local stores

and restaurants, grounded consumers streamed Tiger

King on Netflix, stocked up on groceries and sup-

plies with Amazon, and gathered together on Zoom.

Hardly any company is immune from the economic

shutdown, but the big ones have more resources to

weather the pandemic and, in some cases, may be

able to gain market share.

On Wall Street, that’s exacerbating a divergence

between small and large companies which has

How Quants

Got Bullied

With a few giant companies dominating the market, money

managers who buy thousands of stocks have lost out

Bloomberg Businessweek May 4, 2020