The ongoing shift for the U.S. small-cap equity market may reinforce the need for the highest quality tools for investors seeking to pursue market opportunities while managing downside risk.
For instance, the Schwab Fundamental U.S. Small Company ETF (NYSEArca:FNDA) offers broad exposure to small-cap U.S. stocks but weights them on fundamental measures of size, including sales, retained operating cash flow, and dividends plus share buybacks, rather than market cap.
The Deutsche X-trackers Russell 2000 Comprehensive Factor ETF (NYSEArca:DESC) select small-cap components based on a broad set of five factors, including quality, value, momentum, low volatility and size.
Additionally, the JPMorgan Diversified Return U.S. Small Cap Equity ETF (NYSEArca:JPSE) tries to reflect the performance of the Russell 2000 Diversified Factor Index, which is comprised of small-cap equity securities in the U.S. selected based on a rules-based proprietary multi-factor selection process that screens for relative valuation, momentum and quality. Stocks are also weighted to diversify risk across individual equity securities.
For more information on small-capitalization stocks, visit our small-cap category.