Small-cap stocks have regained their status as market leaders with much of that leadership emerging in recent weeks.

The strength of smaller stocks is widespread as diversified, growth and value small-cap exchange traded funds have recently been making new highs.

The  Guggenheim S&P Smallcap 600Pure Growth ETF (NYSEArca: RZG) is one of the leaders among small-cap growth ETFs as highlighted by a stellar showing this month.

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Small caps have rallied in the wake of the stunning presidential election results earlier this month and smaller stocks and ETFs like RZG could offer even more upside as the Federal Reserve nears its first interest rate hike of 2016.

Smaller stocks can still navigate through a slowly rising rate environment. Smaller companies, which focus on U.S. markets, are less exposed to a stronger U.S. dollar as rates rise, which would more negatively affect larger corporations with a global footprint. Additionally, periods of rising rates also coincide with expanding economies, which often benefit smaller companies.

RZG “follows the S&P SmallCap 600 Pure Growth Index, an offshoot of the broader S&P SmallCap 600. Of course, there are significant differences between RZG and a standard S&P SmallCap 600 tracking ETF, starting with number of holdings. For example, RZG holds just 144 stocks, while a traditional S&P SmallCap 600 tracker holds, you guessed it, somewhere in the neighborhood of 600 stocks,” reports InvestorPlace.

As the broad equities market pushes toward new highs, riskier assets like small-caps have been able to rally back much quicker. When the economy is doing well and the markets rally, we see sentiment for more nimble smaller companies improve and outperform those of their more languorous, larger peers.

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