Small-Cap & Micro-Cap ETFs

PZI follows the Zacks Micro Cap Index, which identifies micro-cap stocks with the highest potential to outperform passive benchmark of micro-cap indices and other micro-cap strategies.

While ETFs allow investors diversify across the micro-cap space, the underlying micro-cap market faces some liquidity concerns.

“The ETF’s portfolio churn means it loses lots of money to market-impact costs and bid-ask spreads,” Morningstar analyst Samuel Lee warned of PZI.

Some small-cap ETFs include:

  • iShares Russell 2000 (NYSEArca: IWM)
  • iShares Core S&P Small-Cap ETF(NYSEArca: IJR)
  • Vanguard Small Cap ETF (NYSEArca: VB)

For more information on small capitalization funds, visit our small-cap category.

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own IWM.