Too Much Biotech in Diversified Small-Cap ETFs?

While a pullback in small-cap biotech names is unlikely to leave IJR and IWM unscathed, the potentially more problematic issue for these ETFs is the average weight of 24% the pair sport to the financial services sector. Problematic because smaller financial services companies are perceived as vulnerable to increases in short-term interest rates, the very rates the Federal Reserve will hike when it finally boosts borrowing costs. [Leadership From Small-Cap ETFs]

iShares Russell 2000 ETF

Tom Lydon’s clients own shares of IWM.