Trump's 'America First' Mantra Helps Rally Small-Cap ETFs


Among the best performing broad small-cap ETFs, the Guggenheim S&P Smallcap 600 Pure Value ETF (NYSEArca: RZV) led gains, rising 14.3% over the past week. RZV targets companies that exhibit the value characteristic but focuses on the smaller companies taken from the S&P SmallCap 600 benchmark. The fund is also heavy on industrials 28.6%, consumer cyclical 14.3% and basic materials 14.3%, which may benefit from Trump’s endorsement of the infrastructure sector.

The First Trust Dow Jones Select MicroCap ETF (NYSEArca: FDM) advanced 12.7% over the past week. FDM focuses on some of the smallest U.S. companies, tracking the Dow Jones Select Microcap Index, which is comprised of securities whose market capitalization from the bottom two deciles of NYSE stocks. FDM includes a hefty 46.7% tilt toward the financials sector, which has strengthened on hopes that Trump would roll back strict Dodd-Frank regulations placed on the banking sector.

The Oppenheimer Small Cap Fund (NYSEArca: RWJ) also gained 11.5% over the past week. The ETF follows a rules-based, disciplined smart beta indexing methodology to improve its performance return through weighting each security in the underlying index by top line revenue. Components are then rebalanced every quarter to keep the Revenue-Weighted indices in line with the companies’ most recently reported revenue levels. RWJ also includes hefty tilts toward cyclical sectors that benefit from fiscal spending, including consumer discretionary 22.8% and industrial 19.7%.

ETF investors have already piled into the small-cap category in the wake of Trump’s victory. Over the past week, the iShares Russell 2000 ETF (NYSEArca: IWM), the largest ETF tracking small-cap stocks, attracted $4.5 billion in net inflows and its rival iShares Core S&P Small-Cap ETF (NYSEArca: IJR), which follows the S&P SmallCap 600 Index, saw $633 million in net inflows, according to XTF data.