Instead of trying to cherry pick small-cap stocks, investors can consider a diversified ETF to gain exposure to a broad selection of U.S. small-caps. For instance, the iShares Russell 2000 ETF (NYSEArca: IWM), which is the largest available, tracks about 2,000 small-cap U.S.-listed stocks that are part of the broadly defined Russell 3000 Index. IWM has gained 34.2% year-to-date, compared to the 29.5% rise in the S&P 500.
For more information on small-cap stocks, visit our small-cap category.
Max Chen contributed to this article.
Full disclosure: Tom Lydon’s clients own IWM.