Reconsidering Small-Caps With Hot Oppenheimer ETF

At the end of the second quarter, RWJ was also underweight healthcare, technology and financial services names relative to S&P SmallCap 600. However, RWJ’s price-to-earnings ratio was significantly below that of the S&P benchmark at the end of June, according to issuer data.

Over the past three years, RWJ’s compound annual growth rate (CAGR) has been 10.7% while the ETF had a maximum drawdown of 25.8% during that span. That is inline with the Russell 2000 Index over the same period.

Small-caps, though, can still navigate through a slowly rising rate environment. Smaller companies, which focus on U.S. markets, are less exposed to a stronger U.S. dollar as rates rise, which would more negatively affect larger corporations with a global footprint. Additionally, periods of rising rates also coincide with expanding economies, which often benefit smaller companies.

Year-to-date, investors have added nearly $91 million in new assets to RWJ.

For more information on small-capitalization companies, visit our small-cap category.