A small-cap comeback could be brewing as inflation fears may have already taken their toll. If so, there are a couple of options to consider when it comes to looking at small-cap-focused exchange traded funds (ETFs).
“Small caps have been stung by big losses this year. Some investors think that may be about to change,” a Wall Street Journal report said.
“Shares of many small, U.S.-focused companies have raced ahead of the broader stock market in July,” the report added. “Some investors think that signals more room to run for small-capitalization companies, which can often be more agile and react more quickly to economic changes, including a recession.”
Getting exposure to small-cap equities doesn’t have to be an expensive option, especially when it comes to active management. As such, one fund to consider is the Avantis U.S. Small Cap Equity ETF (AVSC), which relies on a proprietary systematic investment approach that combines the latest in financial science with common sense investment principles.
With only a 0.25% expense ratio, the diversified fund seeks long-term capital appreciation and invests primarily in a diverse group of U.S. small-cap companies across market sectors and industry groups, taking into consideration valuation, profitability, and levels of investment when selecting and weighting securities.
AVSC features:
- Invests in a diverse group of U.S. small-cap companies, taking into consideration valuation, profitability, and levels of investment when selecting and weighting securities.
- Pursues the benefits associated with indexing (diversification, low turnover, transparency, and tax efficiency), but with the ability to add value by making investment decisions using information in current prices.
- Efficient portfolio management and trading process that is designed to enhance returns while seeking to reduce unnecessary risks and costs for investors.
- Built to fit seamlessly into an investor’s asset allocation.
A Value-Oriented Tilt
To help mute volatility, value-focused equities can help investors during a market downturn. Volatility protection is especially important in small-caps, and that strategy is available in the U.S. Small Cap Value ETF (AVUV), which also features a low 0.25% expense ratio.
AVUV features:
- Invests in a broad set of U.S. small-cap companies and is designed to increase expected returns by focusing on firms trading at low valuations with higher profitability ratios.
- Pursues the benefits associated with indexing (diversification, low turnover, transparency of exposures), but with the ability to add value by making investment decisions using information in current prices.
- Efficient portfolio management and trading process that is designed to enhance returns with the goal of reducing unnecessary risks and costs for investors.
- Built to fit seamlessly into an investor’s asset allocation.
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