The S&P Small Cap 600 has now underperformed the S&P 500 by over 10% since March. July was particularly brutal as small caps underperformed by nearly 6% in that month alone. This relative underperformance has been somewhat predictable given what the Fed has been up to with the taper program. The underperformance of small caps has been tracking the reduction of the Fed purchases very closely thus far in 2014.