Following Election Day, investors flocked to IWM, IJR and rival small-cap ETFs as markets priced in President Donald Trump’s “America First” mantra that would help domestically-oriented companies led the next leg in economic growth. However, investors pulled money from some major small-cap ETFs during the first quarter.
Frugal investors looking for low-cost, small-cap index funds have a growing number of options from which to choose, including the Schwab U.S. Small-Cap ETF (NYSEArca: SCHA).
Charles Schwab lowered fees on five exchange traded funds in October. SCHA was part of that group. The fee cuts are seen as a response to BlackRock’s recent cost reductions on 15 of its iShares “Core” ETF suite. SCHA now charges 0.06% per year, or just $6 on a $10,000 stake, making it one of the least expensive small-cap ETFs on the market.
Small caps generally have a greater sensitivity to higher credit costs. High yield and investment grade spreads are within 35bp and 15bp of the lows for the cycle despite elevated levels of leverage,” adds Bank of America/Merrill Lynch.
Tom Lydon’s clients owns shares of IWM.