Impact Capital’s quarterly research report seeks to highlight the latest developments most relevant to your investments and financial planning. In this installment of Three Market Themes, we focus on the year-to-date performance of the major styles of investing, the performance of non-U.S. stocks, and the technology sector’s performance versus the S&P 500.

1. YTD Performance for Large, Small, Growth, Value

The chart above shows the year-to-date performance (through April 21st) of the four major styles of investing in the market:

Small Value (IWN) +23%
Large Value (IVE) +15%
S&P 500 (SPY) +12%*
Large Growth (IVW) +10%
Small Growth (IWO) +7%

As of now, the small cap value ETF (IWN) has been the big winner this year. In general, value stocks have beaten growth stocks.

2. Are International Stocks Ready to Shine?

Since the 2008 high, stocks from outside the United States (ticker: ACWX) have struggled to produce gains. U.S. stocks have outperformed non-U.S. stocks by a wide margin over this period.

Right now, there are three reasons to be optimistic about non-U.S. stocks:

1. They recently moved beyond their 2008 high to new all-time highs.
2. The U.S. dollar (USD) falling since March 2020 has been supportive.
3. The performance of non-US stocks has matched the performance of the S&P 500 over the last eight months.

3. The Technology Sector Takes a Breather

The technology sector (ticker: XLK) has been the leading sector in the S&P 500 for three of the last four years. It is the largest sector in the S&P 500, weighing in at 27% of the index. The COVID-19 pandemic helped the technology sector continue this outperformance until September 1, 2020.

Since then, the sector has slightly underperformed the S&P 500. Should its underperformance continue to worsen, it has the potential to bring the entire market down with it, which has not happened since Q4 2018.

*In this context, the S&P 500 serves as a frame of reference for the market’s year-to-date performance.