Investors who believe this risk-on trend will persist as the equity bull market rally will extend can look to growth-oriented small-cap ETFs to gain diversified exposure to this asset category, such as the iShares Russell 2000 Growth ETF (NYSEArca: IWO), Vanguard Small-Cap Growth ETF (NYSEArca: VBK) and iShares S&P Small-Cap 600 Growth ETF (NYSEArca: IJT).
IWO tries to reflect the performance of the Russell 2000 Growth Index, which is comprised of companies with higher price-to-book ratios and higher forecasted growth relative to all issuers in the Russell 2000 Index. The ETF includes a hefty 24.8% tilt toward health care, followed by 24.7% information technology and 17.4% industrials.
VBK tries to reflect the performance of the CRSP US Small Cap Growth Index. The Vanguard option takes a larger tilt toward financials 20.8%, followed by industrials 19.9% and technology 16.7%.
Lastly, IJT tries to reflect the performance of the S&P SmallCap 600 Growth Index, which includes companies with the strongest growth characteristic taken from the S&P SmallCap 600. Top sector weights include industrials 18.8%, information technology 18.1% and health care 15.9%.