Small-caps, though, can still navigate through a slowly rising rate environment. Smaller companies, which focus on U.S. markets, are less exposed to a stronger U.S. dollar as rates rise, which would more negatively affect larger corporations with a global footprint. Additionally, periods of rising rates also coincide with expanding economies, which often benefit smaller companies.

DWAS holds almost 200 stocks with an average market capitalization of $1.5 billion. The ETF is heavily allocated to three sectors as healthcare, technology and financial services combine for nearly two-thirds of its weight. Industrial and consumer discretionary names combine for another 26.3%.

As a momentum-based strategy, it is not surprising that about 58% of DWAS’s holdings are considereed growth stocks. The remainder are split between small-cap blend and value names. Over the past year, DWAS has topped the Russell 2000 Index by about 250 basis points.

For more on smart beta ETFs, visit our Smart Beta Channel.