2011 Year-End Letter

01/04/12 -

2011 Year-End Letter

The R2000 declined -4.2% in 2011 and underperformed the S&P 500's 2.1% gain by 630 bps.  We note that it was actually an up year for the S&P 600 Small-Cap index which gained 1.0% in '11.

'11 was a year in three parts as it was in '10 only with a deeper mid-year decline.  The R2000 rallied 11.5% to its July '11 high before falling -26.6% to its Oct '11 low after which the index rallied strongly, up 23.4% into year-end.  Despite the last few roller-coaster years, '11's low and high were higher than '10's offering a bullish pattern.

Read further for our year-end analysis on sector allocation, quality metrics, volatility, nominal & relative performance, small-cap portfolio manager average performance relative to the benchmarks and timeline of notable events.

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