The Rotation Trade

by | Feb 9, 2021 | Investing

The so-called “rotation trade” continued into early February, after a strong Q4.  This term refers to the market “rotating” from large growth/big tech stocks to small cap and value stocks in the expectation that the vaccines will do the trick and the economy can reopen fully in the near future.

The S&P 500 Index rose 4.4% through Monday (February 8), while the small-cap Russell 2000 climbed 16%, following big gains in Q4.  Even better, the DFA small cap value fund is up over 16.5%![i]

International and emerging markets stocks are also performing well.  The DFA emerging markets core equity fund is up 7% so far this year.[ii]

That’s why we stay diversified–we never know when the “rotation trade” is coming!

[i]  Source: Morningstar Direct, data as of 2/8/2021

[ii] Source: Morningstar Direct, data as of 2/8/2021

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