https://money.usnews.com/investing/funds/slideshows/10-small-cap-etfs-for-all-investors?src=usn_invested_nlSept. 12, 2018
In 2018, plenty of investors are worrying about the end of the bull market. Prospects of a global trade war, inflation fears and the general chaos in the White House prompted more than a few hysterical headlines about how the end is near for stocks.
But so far, there hasn't been much in the way of losses for the typical investor. The S&P 500 is up 7 percent and many simply haven't noticed the gains in large-cap stocks amid the negativity. Also, many more investors haven't noticed that smaller stocks are outperforming their larger peers in many respects.
Here are 10 interesting ways to play this trend.
1. iShares Russell 2000 ETF (ticker: IWM). One of the largest small-cap exchange-traded funds by assets, this fund is benchmarked to the popular Russell 2000 index with about $48 billion under management. The Russell 2000 is formed by ranking the top 3,000 public companies headquartered in the U.S., then excluding the top 1,000 (that group comprises the Russell 1000 large-cap index, if you're curious).
The result is a broad focus on small- and medium-sized companies. Some of the stocks you might recognize, including retailer Five Below (FIVE), but there are others many investors may never discover on their own. The Russell 2000 is up about 10 percent this year, and so is the IWM ETF.
2. Vanguard S&P Small-Cap 600 ETF (VIOO). Similar to the Russell methodology, S&P takes the universe of stocks and cuts it into three tranches – the 500 biggest stocks to represent the large-cap S&P 500 index everyone is familiar with, the next No. 501 through 900 to represent the mid-cap S&P 400 index and then stocks 901 through 1,500 to represent the S&P 600 small-cap index.
The list overlaps in places with the Russell 2000, but the universe is smaller in total size and generally focuses on companies that are a bit larger. – Jeff Reeves
