Small-Cap Value Outperforms All Comers in 2004

January 4, 2005 (PLANSPONSOR.com) - "The bigger, the better" didn't seem to hold true in 2004, with small-cap value mutual funds outperforming all others, according to Standard & Poor's.

In the last year, small-cap mutual funds outpaced all other styles, rising 16.2% on the year. Mid-cap funds were close behind at 15.3%, while large-cap lagged behind, gaining only 9.8%, according to an S&P press release.

The rise of the growth fund can largely be attributed to fourth quarter gains, according to S&P, with the average growth fund rising 12.2% in this time. The average value fund in the fourth quarter was 10.9%, while the average blended fund gained 10.7%. S&P attributes this growth to investor confidence tied to lower oil prices and the conclusion of the presidential election.

Over the whole year however, value funds outperformed growth funds in all three sizes, with small-cap value funds gaining 19.51% on the year. The top growth catagory was mid-cap, whcih posted 12.79% gains. Large-cap was behind in all three catagories (value, growth, and blend).

Domestic equity funds also as a whole saw a sharp increase in growth in the fourth quarter. While gains overall were only 1.04% for the first three quarters, huge growth in the fourth quarter brought annual gains to 11.9%.

Projections for 2005 by S&P are not overly glowing, with the company’s analysts predicting single-digit increases for the S&P 500. They believe it will hit 1300 by the end of the year, according to a release. The S&P 500 gained 10.88% in 2004.

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