3 Small-Cap ETFs Ready To Party

3 Small-Cap ETFs Ready To Party

Small-cap equities are getting some renewed praise these days and it's easy to see why. The Russell 2000 Index is up 2.22% this month while the S&P SmallCap 600 Index is higher by 1.22% and both are within striking distance of new 52-week highs.

Those widely followed benchmarks are on the cusps of breakouts and that bodes well for the health of the broader market. Additionally, small-cap equities aren't expensive relative to historical norms.

Recently, CNBC reported that small-cap stocks “are at their most attractive levels since June 2003 relative to large caps, according to data compiled by Jefferies. Historically, small caps have outperformed large caps by an average of 6% over the following year when the valuation gap widens that much.”

For those looking to embrace smaller stocks, here are three exchange-traded funds to consider.

Invesco S&P SmallCap Low Volatility ETF (XSLV)

As is so often noted with low volatility ETFs, there's a good chance investor leave some upside on the table to prevent high rates of downside capture. The Invesco S&P SmallCap Low Volatility ETF XSLV reminds investors that's not always the case as this low volatility fund is higher by almost 21% year to date.

XSLV follows the S&P SmallCap 600 Low Volatility Index, a collection of the 120 S&P SmallCap 600 members with the lowest trailing 12-month volatility. The fund's components have an average market capitalization of $1.84 billion surprisingly trade at slightly lower multiples than are found on broader small stock benchmarks.

Then again, over 34% of XSLV's holdings are classified as value stocks. Low volatility funds try to be sector agnostic, but they've got to go where volatility isn't. In this case, XSLV is sector-heavy as the financial services and real estate sectors combine for nearly two-thirds of the fund's weight.

Vanguard Small-Cap Growth ETF (VBK)

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