Small-Cap ETFs Better Than Small-Cap Funds
April 18th at 11:12am by Tom Lydon
For the past five years, small-cap stocks have outperformed large-cap stocks by a huge factor. No doubt, investors have chased this trend. In an effort to get a handle on the growing portfolios (and keep the money at the same time), actively managed funds have instituted short-term redemption fees and closed many to new investors.
Today, those looking to increase exposure to this asset class are better served using small-cap ETFs, such as iShares Russell 2000 Index (IWM).
As the WSJ points out, "Small-cap stocks, usually defined as having a market capitalization of less than $1.5 billion, have been rallying for years and have outperformed the broad market.
The Russell 2000 small-stock index is up 11.6% for the year to date, and the S&P SmallCap 600 is up 10.5%, both drubbing the Dow Jones Industrial Average’s 3.9% gain and the S&P 500-stock index’s 3.3% rise."
