Amid bets of faster-than-expected economic recovery, small-caps have been outperforming this year with the Russell 2000 Index having gained 18.7%. In comparison, the S&P 400 Mid Cap Index and the S&P 500 Index are up 15.3% and 4.8%, respectively.
Continued progress in the development of more COVID-19 vaccines, rapid vaccine rollout, reopening of the economy as well as new stimulus are fueling growth in the stock market. The combination of all these factors led to pent-up demand, resulting in higher demand for all types of products and services in the economy. President Joe Biden last week signed one of the largest U.S. fiscal $1.9 trillion stimulus bills into law (read: ETF to Ride the Market Rally on Biden's Stimulus Optimism). Additionally, the latest bouts of data have been encouraging, infusing optimism into economic growth. Consumer sentiment as depicted by the University of Michigan jumped to a one-year high in early March as more vaccines and fiscal relief boosted the economic outlook. The United States added 379,000 jobs — the highest since October — in February, while unemployment fell to 6.2%. U.S. manufacturing activity increased to a three-year high last month with acceleration in new orders. Consumer spending rose the most in seven months in January while construction spending surged to a record high, boosted by strong private and public outlays. Strong corporate earnings also bode well for economic growth (read: U.S. Manufacturing at 3-Year High: ETFs in Focus). As small-cap companies are closely tied to the U.S. economy, these are poised to outperform when the economy improves. These pint-sized stocks generate most of their revenues from the domestic market, making them great choices during an uptrend. Further, the Fed has pledged to maintain its accommodative stance and will continue to buy $120 billion in Treasury and mortgage-backed securities per month. A low interest rate bodes well for small-cap stocks as it pushes up economic activities and results in higher spending, thus boosting the domestically focused companies. Given this, we have highlighted a number of small-cap ETFs that hit all-time highs in the last trading session and are among the popular choices. Any of these could be excellent plays for investors seeking to ride out the bullish trend in the coming months given that these have a Zacks ETF Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold). First Trust Small Cap Core AlphaDEX Fund ( FYX Quick Quote FYX - Free Report) This ETF employs the AlphaDEX stock selection methodology to select stocks from the NASDAQ US 700 Small Cap Index. All-Time High Price: $96.26 Zacks ETF Rank: #3 AUM: $887.8 million Expense Ratio: 0.61% YTD Returns: 24.7% iShares Morningstar Small-Cap Value ETF
This fund targets the value corner of the small-cap segment.
All-Time High Price: $177.27 Zacks ETF Rank: #3 AUM: $424.3 million Expense Ratio: 0.30% YTD Returns: 25.8% Schwab U.S. Small-Cap ETF ( SCHA Quick Quote SCHA - Free Report) This ETF tracks the Dow Jones U.S. Small-Cap Total Stock Market Index. All-Time High Price: $105.27 Zacks ETF Rank: #2 AUM: $15.8 billion Expense Ratio: 0.04% YTD Returns: 18.3% Invesco S&P SmallCap 600 Pure Value ETF ( RZV Quick Quote RZV - Free Report) This ETF follows the S&P SmallCap 600 Pure Value Index, which measures the performance of securities that exhibit strong value characteristics in the S&P SmallCap 600 Index (read: Value Outshines Growth: 5 ETF Winners). All-Time High Price: $95.30 Zacks ETF Rank: #3 AUM: $360.9 million Expense Ratio: 0.35% YTD Returns: 41.3% Invesco S&P SmallCap Consumer Discretionary ETF ( PSCD Quick Quote PSCD - Free Report) This product offers exposure to the small-cap companies engaged in providing consumer goods and services that are cyclical in nature, including retail, automotive, leisure and recreation, media and real estate. All-Time High Price: $120.78 Zacks ETF Rank: #2 AUM: $83.3 million Expense Ratio: 0.29% YTD Returns: 46.6% Invesco S&P SmallCap Financials ETF ( PSCF Quick Quote PSCF - Free Report) This ETF seeks exposure in small-cap securities principally engaged in the business of providing services and products, including banking, investment services, insurance and real estate finance services. All-Time High Price: $61.08 Zacks ETF Rank: #3 AUM: $45.8 million Expense Ratio: 0.29% YTD Returns: 23.1% Invesco S&P SmallCap Industrials ETF ( PSCI Quick Quote PSCI - Free Report) This fund offers exposure to the small-cap securities principally engaged in the business of providing industrial products and services, including engineering, heavy machinery, construction, electrical equipment, aerospace and defense and general manufacturing (read: Can Industrial ETFs Shine Bright on Vaccine Optimism in 2021?). All-Time High Price: $98.51 Zacks ETF Rank: #3 AUM: $90.1 million Expense Ratio: 0.29% YTD Returns: 22.7% Invesco S&P SmallCap Utilities & Communication Services ETF ( PSCU Quick Quote PSCU - Free Report) This ETF offers exposure to the securities of US utility companies and companies in the communication services sector. All-Time High Price: $66.80 Zacks ETF Rank: #2 AUM: $26.8 million Expense Ratio: 0.29% YTD Returns: 22.7% Invesco S&P SmallCap Value with Momentum ETF ( XSVM Quick Quote XSVM - Free Report) This ETF invests in the S&P SmallCap 600 Index having the highest "value scores" and "momentum scores." All-Time High Price: $53.12 Zacks ETF Rank: #3 AUM: $204.3 million Expense Ratio: 0.39% YTD Returns: 46.3% iShares MSCI USA Small-Cap Min Vol Factor ETF ( SMMV Quick Quote SMMV - Free Report) This fund offers exposure to U.S. small-cap stocks with potentially lower risk. All-Time High Price: $38.04 Zacks ETF Rank: #3 AUM: $918.9 million Expense Ratio: 0.20% YTD Returns: 12.2% Want key ETF info delivered straight to your inbox?
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