With so many exchange traded funds (ETFs) on the market and so little time, what is an investor to do? Amanda B. Kish for The Motley Fool helps dissect small-cap ETFs for those in need of diversified market exposure.
Small-blend ETFs:
- iShares Russell 2000 Index ETF (IWM)
This ETF’s performance stays close to the traditional, small-cap Russell 2000 Index and has been around longer than most ETFs. It uses a sampling strategy to track 2,000 of the smallest capitalization-weighted companies included within Russell’s broader 3000 index. Its expense ratio is 0.20%. - Vanguard Small-Cap ETF (VB)
VB tracks the MSCI U.S. Small Cap 1750 Index that represents about 11% of the total U.S. equity market. This ETF tends have broader swings and be more volatile than IWM. However, it’s expense ratio is just 0.10%. - iShares MorningStar Small Core ETF (JKJ)
This ETF uses active management and tracks an index based upon small-cap stocks with low prices in relation to book value, earnings, cash flow and dividends. It has the highest expense ration out of the three at 0.25%.
Small-value ETF
- iShares S&P 600 Value Index ETF (IJS)
IJS tracks the performance of the S&P Small Cap 600/Citigroup Value index that comprises holdings from the S&P 600 Index with the lowest price-to-book rations. Be prepared for a bumpy ride with this ETF, as it tends to have more volatility than some of the other small-cap ETFs. Its expense ratio also is 0.25%.
Small-growth ETF:
- Vanguard Small-Cap Growth ETF (VBK)
This ETF tracks the growth oriented companies of the MSCI US Small-Cap Growth Index. Born in January of 2004, this fund has the highest three-year return of any small-growth ETF available. Its expense ratio 0.12%.
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