3 Small-Cap ETFs Ready To Party

Up nearly 30% this year, the Vanguard Small-Cap Growth ETF VBK is one of the best-performing non-leveraged, domestic small stock ETFs on the year. And is the case with so many Vanguard funds, VBK is inexpensive with an annual fee of just 0.07%, or $7 on a $10,000 stake.

The small-cap/growth combination can lead to higher rewards and higher volatility, but there's the benefit of many of these companies being levered to the domestic economy.

“Small-cap stocks differ from large-caps in several ways, aside from being smaller, of course,” reports Barron's. “They are more likely to make more of their money in the U.S. than large-caps, with only 21% of revenue from overseas, versus 33% for their bigger brethren.”

VBK holds 621 stocks, 39.30% of which hail from the industrial and technology sectors.

O'Shares FTSE Russell Small Cap Quality Dividend ETF (OUSM)

Small-cap stocks and ETFs usually aren't the assets investors looking for income embrace, but the O'Shares FTSE Russell Small Cap Quality Dividend ETF OUSM flips that script. Its 2.14% dividend yield isn't high, but it's almost 100 basis points above the yield on the Russell 2000.

That's not the only reason OUSM is alluring. Many small caps aren't yet profitable, making dividends a far-flung idea. OUSM focuses on quality companies, however, implying many of its holdings are profitable and can not only afford current dividend payments but are in a position to growth their payouts over time.

OUSM is beating the S&P SmallCap 600 by 400 basis points this year, indicating investors can have their cake (dividends, lower volatility and quality) and eat it too.

“The quality and low volatility factors are designed to reduce exposure to high dividend equities that have experienced large price declines, as may occur with some dividend investing strategies,” according to O'Shares.

1 2
View single page >> |
How did you like this article? Let us know so we can better customize your reading experience. Users' ratings are only visible to themselves.


Leave a comment to automatically be entered into our contest to win a free Echo Show.