With so many exchange traded funds (ETFs) on the market and so little time, what is an investor to do? Amanda B. Kish for The Motley Fool helps dissect small-cap ETFs for those in need of diversified market exposure.
- iShares Russell 2000 Index ETF (IWM)
This ETF’s performance stays close to the traditional, small-cap Russell 2000 Index and has been around longer than most ETFs. It uses a sampling strategy to track 2,000 of the smallest capitalization-weighted companies included within Russell’s broader 3000 index. Its expense ratio is 0.20%.
- Vanguard Small-Cap ETF (VB)
VB tracks the MSCI U.S. Small Cap 1750 Index that represents about 11% of the total U.S. equity market. This ETF tends have broader swings and be more volatile than IWM. However, it’s expense ratio is just 0.10%.
- iShares MorningStar Small Core ETF (JKJ)
This ETF uses active management and tracks an index based upon small-cap stocks with low prices in relation to book value, earnings, cash flow and dividends. It has the highest expense ration out of the three at 0.25%.
- iShares S&P 600 Value Index ETF (IJS)
IJS tracks the performance of the S&P Small Cap 600/Citigroup Value index that comprises holdings from the S&P 600 Index with the lowest price-to-book rations. Be prepared for a bumpy ride with this ETF, as it tends to have more volatility than some of the other small-cap ETFs. Its expense ratio also is 0.25%.
- Vanguard Small-Cap Growth ETF (VBK)
This ETF tracks the growth oriented companies of the MSCI US Small-Cap Growth Index. Born in January of 2004, this fund has the highest three-year return of any small-growth ETF available. Its expense ratio 0.12%.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.