Don’t look now, but small cap equities are rallying with the iShares Russell 2000 ETF (IWM) up 7.35% through Thursday’s trading session. It appears that Mr. Momentum starting to swing towards the direction of small caps.
“Momentum is the market anomaly in which stocks that have outperformed over the prior 12 months have a strong track record of continuing their outperformance,” said Ari Wald, head of technical analysis at Oppenheimer. “As the basis of our investment strategy, we’re encouraged that it’s working in this environment, too. For instance, the small-cap momentum ETF has rallied through big resistance relative to the Russell 2000.”
IWM seeks to track the investment results of the Russell 2000® Index, which measures the performance of the small-capitalization sector of the U.S. equity market.
For other concentrated exposure in small caps, here are a few Vanguard funds to look at:
- Vanguard Small-Cap Index Fund ETF Shares (NYSEArca: VB): seeks to track the performance of a benchmark index that measures the investment return of small-capitalization stocks. The fund employs an indexing investment approach designed to track the performance of the CRSP US Small Cap Index, a broadly diversified index of stocks of small U.S. companies.
- Vanguard Small-Cap Value Index Fund ETF Shares (NYSEArca: VBR): seeks to track the performance of a benchmark index that measures the investment return of small-capitalization value stocks. The fund employs an indexing investment approach designed to track the performance of the CRSP US Small Cap Value Index, a broadly diversified index of value stocks of small U.S. companies.
- Vanguard Small-Cap Growth Index Fund ETF Shares (VBK): seeks to track the performance of a benchmark index that measures the investment return of small-capitalization growth stocks. The fund employs an indexing investment approach designed to track the performance of the CRSP US Small Cap Growth Index, a broadly diversified index of growth stocks of small U.S. companies.
Investors looking for small cap options using a multi-factor approach can look at the Principal U.S. Small-Cap Multi-Factor Index ETF (PSC). PSC seeks investment results that closely correspond, to the performance of the Nasdaq US Small Cap Select Leaders Index.
The fund invests at least 80% of its net assets, plus any borrowings for investment purposes, in equity securities of companies that compose the index. The index uses a quantitative model designed to identify equity securities (including growth and value stock) of small-capitalization companies in the Nasdaq US Small Cap Index (the “parent index”) that exhibit potential for high degrees of sustainable shareholder yield, pricing power, and strong momentum, while adjusting for liquidity and quality.
For more market trends, visit ETF Trends.