Small-cap stocks and related small-cap ETFs are on a torrid pace this year, but investors looking for even more exciting gains with ETFs tracking small companies may want to consider the iShares Micro-Cap ETF (NYSEArca: IWC).
Micro-cap companies have a market capitalization of around $50 million and $300 million, or less than small-cap stocks. Typically, investors will notice that larger capitalization stocks are less risky, generating smaller but more steady returns. In comparison, smaller company stock see greater swings, but the added risk comes with potentially greater returns.
IWC, which is up 11.69% year-to-date, follows the Russell Microcap Index. The micro-cap ETF is handily outperforming widely followed large- and small-cap benchmarks this year.
“The Russell Microcap Index, which includes the smallest 1,000 securities in the US small cap Russell 2000 Index, has a return of 11.5% in 2018, exceeding the performance of Russell US Indexes measuring small-, mid-, large- and mega-cap stocks,” according to FTSE Russell.