September 23, 2008 at 11:00 am by Tom Lydon
Micro-cap stocks and exchange traded funds (ETFs) have been struggling along with just about every other segment of the market as of late.
When micro-caps do take off, they do so with quite a bang, and it usually happens fast, reports Andrew Leckey for Tribune Media Services.
Small and micro-cap stocks and ETFs also help investors with asset allocation, and remember, many large firms turned out to be complete losers this year. Five years ago, small-caps were one of the best areas to be in. And though micro- or small-cap stocks can fall further, many are trading below actual book value, which is the value of the company that the shareholders would receive if the company were to liquidate.
Micro-caps can be tricky for investors. These companies are the smallest of the small, and are therefore challenging to research. But with micro-cap ETFs, the legwork on that end is done for you.
In a market recovery, these areas are poised to do the best, since they have the most room to grow and the companies in them are nimble. These include ETFs such as:
- First Trust Dow Jones Select MicroCap Fund (FDM), down 3.5% year-to-date
- PowerShares Zacks MicroCap Fund (PZI), down 12.6% year-to-date
- SPDR S&P International Small Cap ETF (GWX), down 24.2% year-to-date
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