Investors have long focused on larger companies to stabilize their portfolios during economic and political uncertainty. But as we look to future opportunities, it may be time to consider smaller companies outside the large cap ecosystem.
In the upcoming webcast, Go Small or Go Home: Why Choose Small Caps in Today’s Market, Ben Jones, Index Development Specialist, Nasdaq; John Lewis, Senior Portfolio Manager, Nasdaq Dorsey Wright; Rene Reyna, Head of Thematic and Specialty Product Strategy ETFs and Indexed Strategies, Invesco; and Andrew Hull, Associate ETF Strategist, First Trust, will outline key developments in the world of smaller stocks.
As a way to access these markets, investors can consider funds like the First Trust Dorsey Wright DALI 1 ETF (NasdaqGM: DALI), which incorporates a relative strength strategy to home in on market segments with the highest forward momentum.
The First Trust Dorsey Wright DALI 1 ETF tries to reflect the performance of the Nasdaq Dorsey Wright DALI 1 Index, which consists exclusively of U.S.-listed exchange-traded funds across four broad asset classes, including U.S. equity securities, international equity securities, fixed income securities. and commodities. The Index seeks to determine which of the four is most likely to experience the best investment performance until the next Index evaluation date.
The composition of the underlying index is determined by the highest levels of ‘relative strength’ to screen for those companies with the best performance over the near-term. Relative strength calculation is an objective method of comparing two investment options to determine which of the two is exhibiting greater forward price momentum.
The Invesco DWA SmallCap Momentum Portfolio (NasdaqGM: DWAS) may also be an efficient way to access smaller stocks. DWAS follows the popular Dorsey, Wright & Associates proprietary selection methodology that is designed to identify small cap firms with positive relative strength characteristics in an attempt to follow companies with strong forward momentum.
The ETF follows the Dorsey Wright SmallCap Technical Leaders Index. DWAS’s index is designed to identify companies that demonstrate powerful relative strength characteristics based on that company’s market performance. Approximately 200 companies are selected for inclusion in the Index from the Nasdaq US Benchmark Index. At its core, DWAS is a momentum-based strategy – one that could prove rewarding if the recent small cap rally continues.
Financial advisors who are interested in learning more about small capitalization stocks can register for the Monday, February 22 webcast here.