Nevertheless, some like Steven Raineri, the lead portfolio manager of the Franklin All-Cap Value fund, are adding onto small-cap positions, anticipating that improvements here at home could bolster the small-cap category.

For instance, most smaller companies are not exposed to foreign exchange risks and the strengthening dollar. According to Bank of America Merrill Lynch, 81.3% of revenue from the Russell 2000 Index is generated within the U.S., whereas 64.3% of revenue for S&P 500 companies come from the states.

As an alternative to small-cap blend ETFs, investors can take a look at the value style to capture relatively cheaper plays. For example, the Vanguard Small-Cap Value ETF (NYSEArca: VBR) has a 16.2 P/E, iShares S&P Small Cap 600 Value Index (NYSEArca: IJS) has a 17.1 P/E and iShares Russell 2000 Value Index (NYSEArca: IWN) has a 16.5 P/E.

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

Max Chen contributed to this article. Tom Lydon’s clients own shares of IWM and SPY.