Usually Dow and Russel are highly correlated, but for the last year this is not so. This article shows some reason for it.
We have made the argument here before that, in addition to being fairly valued by pretty much any historical metric, U.S. large-cap stocks face significant headwinds courtesy of the strong dollar. We are starting to see material impact to big companies’ bottom lines — American Express (AXP) , McDonald’s (MCD) and International Business Machine (IBM) are three Dow components that have attributed earnings weakness to currency volatility (i.e. strong U.S. dollar).
Small companies (generally this means market capitalization under $2 billion) do much less, if any, of their business overseas. As such, there is very little to worry about from a currency standpoint. Consider either the Vanguard Small-Cap ETF (VB) or iShares Russell 2000 (IWM) for broad-based exposure to a stronger, and still strengthening, U.S. economy.