ETF Trends
ETF Trends

Exchange traded funds that invest in small-cap stocks have fallen through their 50-day moving average in this week’s selling, breaching a key technical level. However, they rallied back from a similar setback in March.

The $16 billion iShares Russell 2000 (NYSEArca: IWM), an ETF tracking a popular index of U.S. small caps, traded lower Tuesday.

Small-cap stocks have led the way during the rally from the March 2009 bottom. In fact, U.S. small-cap stocks “have outperformed over the past 10 years, providing an annualized return of 9.2%, easily outpacing the large-cap equity returns of 2.7%” Morningstar says in a recent profile of iShares Russell 2000.

However, the outperformance of small-cap ETFs over the past decade is “unsustainable” and they now look expensive relative to large-cap benchmarks such as the S&P 500, the investment researcher said. [Are Small-Cap ETFs Overheating?]

The small-cap ETF is trailing the S&P 500 this year by a slight margin. Other ETFs for the category include Vanguard Small-Cap ETF (NYSEArca: VB) and iShares S&P SmallCap 600 (NYSEArca: IJR).

iShares Russell 2000


The opinions and forecasts expressed herein are solely those of John Spence, 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.