Exchange traded fund investors who are still interested in U.S. equities exposure should focus on the smaller segment of Corporate America.

“For equity exposure, stay here in the U.S.,” with an emphasis toward smaller stocks, Jim McCaughan, chief executive of Principal Global Investors, said on CNBC.

For instance, the iShares Core S&P Mid-Cap ETF (NYSEArca: IJH) and SPDR S&P MidCap 400 ETF (NYSEArca: MDY) both track the S&P MidCap 400 Index, which include a 68.7% tilt toward mid-caps and 31.2% to small-caps.

The Vanguard Mid-Cap ETF (NYSEArca: VO) provides an alternative as it follows the CRSP US Mid Cap Index, which leans towards larger companies with a 79.9% tilt toward mid-caps and 19.2% in large-caps.

Additionally, the Schwab US Mid-Cap ETF (NYSEArca: SCHM), which follows the Dow Jones U.S. Mid-Cap Total Stock Market Index, includes a 86.0% position in mid-caps and 11.1% in small-caps.

McCaughan argues that that these smaller companies are less susceptible to currency risks, notably a stronger U.S. dollar, and are better positioned to benefit from strengthening domestic conditions, such as the improving housing market and cheaper energy.

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