There are other headwinds for small-cap ETFs to deal with, too.
“Strong global economic growth and a weaker dollar are boons for large multinationals, which derive more of their profits overseas. Small-cap earnings estimates also are lagging. Analysts have revised down their 2017 and 2018 estimates by 8% and 6%, respectively, year to date. This compares to downgrades of just 1% and 2% for large caps. The trend is not new. Analyst downgrades of small-cap earnings estimates have outnumbered upgrades since 2011,” according to BlackRock.
For more information on small-capitalization stocks, visit our small-cap category.
Tom Lydon’s clients own shares of IWM.