The global equity markets have been led by U.S. equities and, within the U.S., large caps have dominated. The S&P 500 is up +13.98% while the Russell 2000 is up only +1.99% and the MSCI All Country World Index (ACWI) excluding the U.S. is down -0.27%.

The large divergence in equity performance gives the false impression that a diversified equity portfolio is underperforming if an investor gauges performance by the S&P 500. For example, a sample portfolio of 40% S&P 500, 20% Russell 2000 and 40% MSCI ACWI ex U.S. would be up 5.88% YTD. We believe it will be important during year-end client reviews to be aware of this divergence while discussing portfolio progress.