Small-Cap ETFs' Time to Shine

Furthermore, the current economic backdrop is aiding small-cap consumer staples over their large-cap counterpart. Smaller consumer staples companies historically do better on GDP growth, rising on average 5.9% per 1% of growth, whereas large caps rise just 4.0% per 1% of growth.

The Federal Reserve’s tighter monetary policy may also help support the small-cap outlook over its peers. Rising rates especially help small-cap consumer staples more than large-caps – for every 100 basis point rate rise, small-cap consumer staples rose 7.2% on average historically, compared to the average 4.0% gain among large-cap consumer staples companies during a period of 100 basis point rate increase.

“As with all sectors, it is important to drill down further into Industry Groups, and in some cases even into the more granular industries and sub-industries for clarity about where the performance and potential opportunities exist within a sector,” Gunzberg said. “The flexibility to change prices of goods quickly is a key to performance in this market, especially if inflation might be a concern.”

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