ETF investors who are interested in capturing the potential growth opportunity of small-caps can look to something like the IQ Chaikin U.S. Small Cap ETF (NasdaqGM: CSML), which tries to reflect the performance of the Nasdaq Chaikin Power US Small Cap Index.
The underlying index applies a shareholder yield screen and the so-called Chaikin Power Gauge, a quantitative multi-factor model that tries to identify securities that are expected to outperform their peers, to select components from the Nasdaq US 1500 Index.
The Chaikin Power Gauge is a 20 multi-factor model that screens for value, growth, technical and sentiment factors, such as price-to-book value, return-on-equity, free cash flow, price trends, relative strength, volume trend, earnings growth, earnings trends, projected price/earnings ratio, insider activity, short interest and earnings estimate trends. The gauge will identify each security’s ability to outperform market-weighted products and active strategies.
For more information on small-capitalization stocks, visit our small-cap category.