Behind the small-cap rally


Sometimes good market news comes in small packages.

The rally in small-cap stocks in 2018 has been a pleasant surprise amid the rise in volatility and wild price gyrations.

Some see the Russell 2,000, which recently touched fresh all-time highs in “breakout mode,” as Bespoke Investment Group aptly put it in a recent post.

 

investing

 

Small-Cap Wonders

In a period of increased trade friction with Asia, small-cap stocks look attractive as they’re focused on the U.S. market and less sensitive to currency swings.

Art Hogan, B. Riley FRB’s chief market strategist, recent set a year-end target of 1,800 on the Russell 2000.

If that proves right, it would mean a 16% gain from the start of the year.

 

investing

 

 

ETF Options

If you’re looking for ways to give your portfolio more exposure to small-caps, there are plenty of ETFs to choose from.

The iShares Core S&P Small-Cap (IJR) and Oppenheimer Small Cap Revenue ETFs (RWJ) are two of the better known ones.

 

investing

 

 

 

Takeaway

The small-cap rally has been impressive, in my view.

Through May 22, the Russell 2000 is up nearly 20% over the past year.

That’s a better performance than the Dow Jones Industrial Average and S&P 500 Index over the same time frame.

Small-caps are tiny but mighty.

Photo Credit: 401 (K) 2012 via Flickr Creative Commons

Author profile

Xavier Brenner
Xavier Brenner
Xavier Brenner has covered global market, business and economic trends for Interactive Brokers Asset Management since 2013. An experienced financial journalist, Brenner offers analysis and insights on the stories that matter to the discerning investor.