Small caps reveal a shifting economy

The US has experienced a massive shift in the nature of its economy over the last half century. The US was traditionally a manufacturing-focused economy, supplying a variety of raw materials and consumer and industrial products domestically and abroad. Today, data shows the US economy is most heavily represented by service-oriented sectors such as Technology, Health Care and Financials and less so by the industrial sectors such as Energy, Basic Materials and Industrials. However, the leading sectors are always in a state of change indicative of economic, consumer, and industry trends. Fourth quarter saw the addition of 39 companies to the Russell 2000 and eight companies to the Russell 1000.

Exhibit 6: Fourth quarter IPOs

Quarter end (%) (as of 12/31/2021)

Exhibit 7: Quarterly sector weightings

Quarter end (%) (as of 12/31/2021)

Exhibit 8: Sector performance review

Total return (%) (as of 12/31/2021)

Exhibit 9: Sector contribution to return

Year to date (%) (as of 12/31/2021)

Exhibit 10: Sector history

Monthly weightings (%) (as of 12/31/2021)

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