Small-cap stocks and the corresponding exchange traded funds are delivering for investors. That includes some smart beta strategies, such as the WisdomTree SmallCap Earnings Fund (NYSEArca: EES).

EES, which weights its components by earnings, is up more than 9% year-to-date. The fund is one of several earnings-weighted products from WisdomTree, which also offers the WisdomTree Total Earnings Fund ETF (NYSEArca: EXT) and WisdomTree Earnings 500 Fund (NYSEArca: EPS), among others.

Specifically, the ETFs track earnings-weighted indices that screen for positive cumulative earnings over their most recent four fiscal quarter period and assigns weights to components to reflect the proportionate share of the aggregate learning’s each company generated, so those with greater earnings have larger weights. Due to this particular indexing methodology, the ETFs lean toward value and quality factors, and within the mid- and small-cap ETFs, the size factor, which have all been historically associated with excess returns compared to the broader market over the long-haul.

EES can be alternative to traditional, diversified small-cap ETFs, which may track benchmarks chock full of richly valued growth stocks from the healthcare and technology sectors.

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