Small Caps Can Offer Investors Big Opportunities Through 2020

The biotechnology sector is giving investors some big opportunities to capitalize on small cap equities. With a number of companies working feverishly to develop a Covid-19 vaccine, it’s one area that exchange-traded fund (ETF) investors can look for gains through 2020.

“Small-cap stocks receive minimal attention from the media yet plenty of these companies are worthy of looking at,” a Stock News article noted. “Take a close look at the small-cap stocks with exemplary POWR Ratings and you will find some true gems. In particular, the following small-cap stocks are quite attractive at their current prices: Inovio Pharmaceuticals (INO), (OSTK), ACM Research (ACMR), NantKwest (NK) and Vapotherm Inc. (VAPO).”

A Factor-Based Small Cap Alternative

For investors looking to use factor-based strategies to enhance their small cap exposure, there’s the Goldman Sachs ActiveBeta U.S. Small Cap Equity ETF (GSSC). The fund seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Goldman Sachs ActiveBeta® U.S. Small Cap Equity Index. The index is designed to deliver exposure to equity securities of small capitalization U.S. issuers.

Additionally, the index is constructed using the patented ActiveBeta® Portfolio Construction Methodology, which was developed to provide exposure to the “factors” that are commonly tied to a stock’s outperformance relative to market returns. These factors include value, momentum, quality, and low volatility.

GSSC Chart

GSSC data by YCharts

Biotech ETF Options

Additionally, investors can get next-level biotech exposure with funds like the Goldman Sachs Human Evolution ETF (GDNA). GDNA seeks to provide investment results that closely correspond, before fees and expenses, to the performance of the Goldman Sachs Human Evolution Index, which is designed to deliver exposure to companies with common equity securities listed on exchanges in certain developed markets that may benefit from the development of new knowledge, medicines, and technologies for the medical treatment of the human condition, from birth to end-of-life care.

GDNA Chart

GDNA data by YCharts

GDNA provides investors with exposure to:

  • Human insight: We believe that people are the best suited to forecast change that is radically different from the past. Leveraging insights from our industry experts, we identified what we believe are the five most powerful secular growth themes being driven by technological innovation.
  • Data-driven strategies: The Goldman Sachs Human Evolution ETF seeks to track a bespoke1 index which leverages advances technology to select and weight companies by a function of ‘thematic beta’ to provide precise exposure to theme.
  • Versatility: The Goldman Sachs thematic ETFs provide exposure to the beneficiaries of technological innovation, regardless of sector, geography or market capitalization. They can be used individually or collectively to help investors position their portfolios for the future.

For more market trends, visit  ETF Trends.