Making a one-eighty from the sell-off over the past few months, small capitalization and technology sector exchange traded funds have been outperforming as investors regain their risk appetite.
The PowerShares QQQ (NasdaqGS: QQQ), which tracks the Nasdaq-100 Index, has increased 2.6% over the past month. The broad tech ETF iShares U.S. Technology ETF (NYSEArca: IYW) is up 2.3% over the last month. [Momentum Tech ETF Rebounds in Style]
Additionally, the iShares Russell 2000 ETF (NYSEArca: IWM), which follows the Russell 2000 index of small-cap stocks, jumped 3.7% over the past month. [Don’t Let New Highs Scare You Away From Stock ETFs]
In comparison, the S&P 500 Index has gained 5% over the same period.
The Nasdaq Composite touched a 14-year high this week while the Russell 2000 is 2% off from its record high after falling at least 8% earlier this year, Bloomberg reports.
“We’re seeing a lot of market appreciation coming from the flow back into risk assets,” Brad McMillan, the chief investment officer for Commonwealth Financial Network, said in the article. “That’s pure risk-on behavior. We saw that reverse as people got scared and we’re seeing it re-reverse as people get more confident.”
The U.S. equities markets are strengthening as analysts anticipate better profit forecasts and the economy shakes off the winter chill. Additionally, Fed Chair Janet Yellen bolstered confidence after stating that rates will remain low for the time being.
“The Fed is in no hurry to change the status quo — it’s a reminder that there’s no place for money to go,” Keith Goddard, president of Capital Advisors Inc., said in the article. “There is no place to go but to try and eke out a return in riskier markets.”
Looking within the small-cap space, growth stocks are standing out. Over the past month, the iShares Core S&P Small-Cap ETF (NYSEArca: IJR) is up 7.1%, iShares S&P Small Cap 600 Value Index (NYSEArca: IJS) rose 6.1% and iShares Small Cap 600 Growth Index Fund (NYSEArca: IJT) increased 8.1%. IJT overweights cyclical sectors like tech 23.2%, industrials 16.2% and consumer discretionary 15.4%.
Additionally, investors interested in combining the small cap and tech themes can take a look at the PowerShares S&P SmallCap Information Technology Portfolio (NasdaqGS: PSCT), which is comprised of tech companies taken from the S&P 600 SmallCap Index. PSCT has surged 10.1% over the past month.
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Max Chen contributed to this article.