There are 120 small- and micro-cap U.S.-listed ETFs with an average expense ratio of 0.50%, according to XTF data. IJR has a 0.12% expense ratio.
Potential investors should also be aware that the small-cap ETFs may have differing level of sector exposure than what many are used to. For instance, IJR has a greater financial exposure of 24% than the S&P 500’s 17%, along with industrials at 17% versus 10%. However, IJR shows a smaller 12% tilt to technology, compared to the S&P 500’s 17%.
Nevertheless, investors may be exposed to potentially attractive growth rates in the more nimble small-cap category. Small-caps are expected to experience an earnings growth rate of 59%, compared to 8% for large-caps.
Investors can also track more domestically focused U.S. companies through other small-cap ETF options like the Vanguard Small Cap ETF (NYSEArca: VB), which follows the CRSP US Small Cap Index and has a cheap 0.09% expense ratio; the iShares Russell 2000 ETF (NYSEArca: IWM), which tracks the Russell 2000 Index and comes with a 0.20% expense ratio; and Schwab U.S. Small-Cap ETF (NYSEArca: SCHA), which tracks the Dow Jones U.S. Small-Cap Total Stock Market Index and has a low 0.08% expense ratio.
For more information on small-capitalization stocks, visit our small-cap category.
Max Chen contributed to this article.