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SMIDs Face ‘Valuation Versus Earnings Growth’ Reckoning

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HFA Staff
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Last week, the Russell 2000 (INDEXRUSSELL:RUT) was down 3.1% while the Russell Midcap (INDEXRUSSELL:RMCC) and Russell 2500 (INDEXRUSSELL:R25I) lost 1% and 2.2% respectively. As SMID sector highlights, Consumer Discretionary was the best performing sector while Health Care was the worst performing on the week.

The sell-off caused a huge spike in volatility as shown in the chart of the CBOE Russell 2000 Volatility Index (INDEXCBOE:RVX) below.

SMID Volatility index

Performance YTD

The following table shows the YTD sector-wise performance for the Russell 2000 (INDEXRUSSELL:RUT) and Russell Midcap (INDEXRUSSELL:RMCC):

2-sectors

Will earnings growth catch up with valuations?

“Our ‘early cycle showdown’ theme is now coming into play! Against a high valuation backdrop, SMID...

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The post above is drafted by the collaboration of the Hedge Fund Alpha Team.