For investors seeking momentum, Vanguard S&P Small-Cap 600 ETF (VIOO - Free Report) is probably on radar now. The fund just hit a 52-week high and is up nearly 20% from its 52-week low price of $121.82/share.
But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
VIOO in Focus
This fund seeks to provide exposure to the small-cap segment with key holdings in industrials, financials, information technology, consumer discretionary and health care. It is highly diversified across components with none holding more than 0.60% share and charges 15 bps in fees per year (see: all the Small Cap ETFs here).
Why the Move?
The small-cap space of the broad U.S. stock market has been an area to watch lately given the surge in U.S. dollar. This is because small-cap stocks will benefit from a rising dollar as these are closely tied to the U.S. economy and do not have much exposure to the international market. Additionally, growing geopolitical tensions especially after the re-initiation of sanctions on Iran has raised the appeal for the pint-sized stocks, which are considered safe and better plays if any political issue creeps into the picture.
More Gains Ahead?
Currently, VIOO has a Zacks ETF Rank #3 (Hold) with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank. As a result, there is still some promise for investors who want to ride on this surging ETF.
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