Exchange traded funds focusing on U.S. small-caps have been decent though somewhat disappointing performers this year, but the same cannot be said of some small-cap sector ETFs. For instance, the PowerShares S&P SmallCap Information Technology Portfolio (NASDAQ: PSCT) is higher by nearly 13% year-to-date.
That showing is notably better than ETFs following the Russell 2000 Index or the S&P SmallCap 600 Index. PSCT tracks the S&P SmallCap 600 Capped Information Technology Index. While the various sector-specific ETFs provide broad exposure to their targeted segments, investors should keep in mind that there are differences in the different ETF offerings.
“The Index is designed to measure the overall performance of common stocks of US information technology companies. These companies are principally engaged in the business of providing information technology-related products and services, including computer hardware and software, Internet, electronics and semiconductors and communication technologies,” according to PowerShares, the fourth-largest U.S. ETF issuer.
The technology sector continues to grow through innovation as more shift to cloud, progress into artificial intelligence and adopt internet of all things devices.
“The success of technology stocks generally shows through in the PowerShares ETF’s performance. With average annual returns that are more than 3.5 percentage points higher than the already impressive gains for the large-cap focused SPDR Technology ETF, small-cap stocks have delivered on the idea that being willing to take greater risks for greater reward can pay off,” according to the Motley Fool.
PSCT’s 87 holdings have an average market capitalization of $1.78 billion, putting the ETF at the higher end of the small-cap spectrum. None of the ETF’s holdings command more than 3.94% of the fund’s weight.