ETF Chart of the Day: Small-Cap Growth | ETF Trends

Late last week in options trading we observed bearish put activity in generally lightly traded iShares Russell 2000 Growth (IWO) options as the exchange traded fund itself broke out to a recent high, its highest trading level since before last August’s steep equity sell-off.

It is likely that a long holder of the ETF is enacting a protective hedge via options against their position in the case of a near term pullback. Listing way back in 2000, IWO has amassed approximately $3.6 billion in assets under management since inception, and until recently, was the only ETF way to play the Russell 2000 Growth Index.

Vanguard entered this space with Vanguard Russell 2000 Growth (VTWG) back in September of 2010, but that fund has remained quite small and off of the radars of most portfolio managers and institutional investors it seems as the ETF only has $12.6 million in assets under management and averages 24,000 shares traded on a daily basis, compared to IWO’s 1.7 million shares daily.

Both ETFs, as their names suggest, track the Russell 2000 Growth Index which is extremely diversified with no visible “top heavy” quality to it. Top weightings in the index are currently: NETL (0.61%), SFSF (0.60%), CLH (0.54%), JKHY (0.52%), and SLXP (0.50%) and the fund is skewed towards technology and industrials from a sector standpoint (22.44% and 18.36% respectively).

Since VTWG’s inception, it has edged out IWO slightly from a performance standpoint, returning 21.60% versus IWO’s 20.94%. More interestingly, is the fact that small-cap growth equity plays based on S&P Indexes have displayed impressive outperformance against their Russell counterparts in the trailing one year periods, (IJT for example is up 4.71% versus IWO down 0.50%) as well as in the trailing five year periods, with IJT returning 21.96% versus IWO up 14.15%.

iShares Russell 2000 Growth

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