A Case for Diversification

Chart of the Week for December 5-11, 2003

The S&P 500 Index measures the movement of 500 of America’s leading companies. The smallest 100 stocks of the group have strongly outperformed the largest 100 stocks in 2003. As can be seen in the chart, the current year-to-date performance of the smallest 100 stocks has outperformed the 20-year annualized returns for all other stocks within the index. Many investors believe that the larger the market capitalization of a company, the less risky the investment, but in some markets the opposite may be true allowing the investor to benefit from diversification. According to the chart, even stocks that seem similar on the surface can perform quite differently.

This illustration was compiled by information from outside sources. These companies are not affiliated with ICMA-RC. This information is being provided for educational purposes and is not intended to be construed as or relied upon as investment advice. ICMA-RC does not offer specific tax or legal advice. Individuals are advised to consider any new investment strategies carefully prior to implementing.

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The performance data quoted represents past performance. Past performance is no guarantee of future results. Investment returns and principal value will fluctuate, so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data illustrated. For performance data current to the most recent month end, contact ICMA-RC Services, LLC by calling 800-669-7400 or by writing to 777 North Capitol Street, NE, Washington, DC 20002-4240. Para asistencia en Español llame al 800-669-8216. Performance data current to the most recent quarter end is available by visiting www.icmarc.org.