Despite Broad Market Slowdown, Small-Cap ETFs Are Outperforming | Page 2 of 2 | ETF Trends

The improved economic conditions should also buoy small-caps and support their higher valuations. IWM is trading at a 20.96 price-to-earnings ratio, IJR has a 21.41 P/E and VB shows a 20.6 P/E.

“We need the US economy to rebound in the second half of year so small-cap sales and earnings growth remains strong and tops the large caps,” Steven DeSanctis, a small-cap strategist with Bank of America Merrill Lynch, said in the article. “With all of the big cuts in estimated growth, second half estimates could be easy to hurdle over.”

iShares Russell 2000 ETF

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

Max Chen contributed to this article.

Full disclosure: Tom Lydon’s clients own shares of IWM and SPY.