Many investors are constantly on the lookout for small-cap stocks with growth potential. These stocks can offer high returns, making them attractive to investors who are willing to take on higher levels of risk. If you’re interested in investing in growth small-cap stocks, one way to do so is through exchange-traded funds (ETFs).
In this article, we will discuss the 12 best small-cap ETF stocks to consider in 2023. We will analyze their performance, track records, and potential for growth. Please note that investing in small-cap stocks can be risky, and it’s always important to do your own research and consider your risk tolerance before making investment decisions.
Table of Contents
What is a small-cap ETF?
A small-cap ETF, or exchange-traded fund, is a type of investment fund that tracks and seeks to replicate the performance of a specific index composed of small-cap stocks. Small-cap stocks represent companies with relatively lower market capitalization compared to large-cap or mid-cap stocks. Pros of investing in small-cap ETFs include potential for high growth due to emerging companies, while cons involve higher volatility. They can be suitable for investors seeking aggressive growth opportunities in their portfolios.
Best Small-Cap ETFs List.
| Vanguard FTSE All World ex-US Small Cap ETF (VSS) | This ETF seeks to track the performance of the FTSE Global Small Cap ex US Index, providing exposure to small-cap companies in developed and emerging markets outside the United States. |
| Vanguard Small-Cap ETF (VB) | Managed by Vanguard, this ETF tracks the performance of the CRSP US Small Cap Index, offering exposure to a diverse range of small-cap stocks |
| iShares Core S&P Small-Cap ETF (IJR) | This ETF seeks to track the S&P SmallCap 600 Index, providing exposure to U.S. small-cap stocks. |
| iShares 0-3 Month Treasury Bond ETF (SGOV) | This ETF focuses on short-term U.S. Treasury bonds, providing a safe and low-duration fixed income option. |
| SPDR S&P 600 Small Cap ETF (SLY): | This ETF tracks the S&P SmallCap 600 Index, offering exposure to U.S. small-cap stocks. |
| Invesco S&P SmallCap 600 Pure Value ETF (RZV) | This ETF focuses on small-cap value stocks within the S&P SmallCap 600 Index. |
| iShares Core S&P 500 ETF (IVV) | This ETF tracks the performance of the S&P 500 Index, which consists of large-cap U.S. stocks, not small-cap stocks. |
| iShares Russell 2000 Growth ETF (IWO) | This ETF tracks the Russell 2000 Growth Index, which includes small-cap growth stocks. |
| Invesco S&P SmallCap Information Technology ETF (PSCT) | This ETF focuses on small-cap stocks in the information technology sector. |
| iShares Core S&P Total U.S. Stock Market ETF (ITOT) | ITOT tracks the performance of the total stock market, including both large-cap and small-cap stocks. |
| Vanguard Short-Term Inflation-Protected Securities ETF (VTIP) | This ETF invests in short-term inflation-protected U.S. government bonds, providing a fixed income component rather than exposure to stocks. |
| Vanguard Value ETF (VTV) | VTV seeks to track the performance of the CRSP US Large Cap Value Index, which consists of large-cap U.S. value stocks. |
Vanguard FTSE All World ex-US Small Cap ETF (VSS)
- Type: Open ended Investment company
- Assets under management: $10.95 billion
- Dividend yield: 2.59%
- Expenses: 0.07%
Vanguard FTSE All-World ex-US Small Cap ETF (VSS) is an exchange-traded fund that aims to track the performance of the FTSE Global Small Cap ex US Index. VSS is passively managed, meaning it seeks to replicate the performance of its underlying index rather than actively selecting stocks.
Inception Date: The ETF was launched on April 2, 2009.
As of the latest data, VSS has demonstrated a year-to-date return of 7.34% based on net asset value (NAV) and 7.73% based on market price (MP). The market price of VSS’s shares was $109.80 as of August 23, 2023. This represents a change of $1.33 (1.23%) from the previous day’s market price.
VSS invests in a variety of small-cap stocks with characteristics like median market capitalization, earnings growth rate, P/E ratio, P/B ratio, and more.
Fund’s holdings:
iShares Core S&P Small-Cap ETF (IJR)
- Type: Open ended Investment company
- Assets under management: $73.5 billion
- Dividend yield: 1.47%
- Expenses: 0.06%
The iShares Core S&P Small Cap ETF (IJR), also known as the “small cap fund”, is an investment vehicle that aims to replicate the returns of the S&P SmallCap 600 index. As of August 2022, the fund has returned an average of 4.5% annually over the past year. However, it is important to note that past performance does not guarantee future results.
The fund is managed by BlackRock, a global investment management firm, and has an expense ratio of 0.06%. It has a total assets under management of $69 billion and was first launched in May 2000. The fund tracks the S&P SmallCap 600, which is a widely-followed index that includes small-cap stocks from the United States. The fund has 603 holdings
iShares 0-3 Month Treasury Bond ETF (SGOV)
- Type: Open ended Investment company
- Assets under management: $12.05 billion
- Dividend yield: 3.54%
- Expenses: 0.07%
The iShares 0-3 Month Treasury Bond ETF, or SGOV, is an exchange-traded fund that invests in U.S. Treasury bonds with maturities between 0 and 3 months. This fund was launched in 2017 and is one of the most popular funds for investing in short Treasury bonds.
The cost per share of SGOV is about $100 and the total value of the fund is about $12.05 billion.
The SGOV fund is highly liquid, meaning that its shares can be sold and bought quickly on the exchange, making it easy to manage your portfolio and profit from market fluctuations.
Vanguard Small-Cap ETF (VB)
- Type: Open ended Investment company
- Assets under management: $129.48 billion
- Dividend yield: 1.52%
- Expenses: 0.05%
The Vanguard Small-Cap ETF, or VB, is an index fund that tracks the CRSP US Small Cap Index, which consists of small-cap U.S. stocks. This fund was launched in 2004 and is still actively managed by Vanguard. The minimum investment requirement is $1, and the current market price is $196.85. The expense ratio is 0.05%. This fund is suitable for investors who seek exposure to smaller companies and want to take advantage of the growth potential in the stock equity market.
SPDR S&P 600 Small Cap ETF (SLY):
- Type: Open ended Investment company
- Assets under management: $1.61 billion
- Dividend yield: 1.71%
- Expenses: 0.15%
The SPDR S&P600 SmallCap ETF (SLY), or simply SLY, is a popular ETF that tracks the performance of smaller companies in the United States, specifically those listed on the S&P SmallCap600 value index. The fund was launched by SPDR in 2012 and is currently managed by State Street Global Advisors.
NAV (net asset value) of SLY was $85.25, and the assets under management were $1.61 billion. The gross expense ratio was 0.15%, which is slightly higher than the average expense ratio for other ETFs.
Invesco S&P SmallCap 600 Pure Value ETF (RZV)
- Type: Open ended Investment company
- Assets under management: $258.6 million
- Dividend yield: 1.36%
- Expenses: 0.35%
The Invesco S&P SmallCap 600 PureValue ETF (RZV) is a fund that invests in small-cap companies in the United States. The fund tracks the performance of the S&P Small Cap 600 Pure Value index, which measures the performance of small-cap companies that have a high level of value in their stock prices. The fund has a low expense ratio of 0.35%, making it a good choice for investors looking for low-cost investments. The fund also has relatively low assets under management of $241 million, making it less risky than other large-cap funds.
However, the fund’s past performance has been negative over the past few years, with a negative 3.57% return in the past year. This may be due to the recent market volatility and macroeconomic uncertainty. Overall, the Invesco S&P SmallCap 600 PureValue ETF is a good option for investors who are looking for a low-risk, low-cost investment in small-cap value stocks.
iShares Core S&P 500 ETF (IVV)
- Type: Open ended Investment company
- Assets under management: $356.19 billion
- Dividend yield: 1.44%
- Expenses: 0.03%
The iShares Comex S&P 500 ETF is one of the largest ETFs tracking the S&P500 index. This ETF is managed by BlackRock and has assets of about $308 billion. The main advantage of the ETF is a low management fee of 0.03%. Based on the provided yield chart, the ETF shows a positive yield history over various time frames, such as 1 year, 3 years, 5 years, 10 years and since its foundation. However, it should be noted that profitability is not guaranteed for the future and may fluctuate. The total asset value of the ETF is about $308 billion, making it one of the largest funds tracking the S&P500.
Management company: iShares (part of BlackRock)
Date of opening: May 15, 2000
iShares Russell 2000 Growth ETF (IWO)
- Type: Open ended Investment company
- Assets under management: $10.47 billion
- Dividend yield: 0.77%
- Expenses: 0.24%
IWO is a sustainable growth fund that offers investors the opportunity to obtain stable returns, taking into account risks and market volatility. The Fund was established in 2000 and has been demonstrating high performance since then, despite market fluctuations.
The analysis of profitability for different periods shows that the average yield over the past year is 18.55%, which is quite stable over long horizons. The fund’s portfolio includes 1,081 assets with market sensitivity expressed by a beta coefficient of 1.023 and an assessment of risk and volatility through standard deviations of 22.56%.
iShares Core S&P Total U.S. Stock Market ETF (ITOT)
- Type: Open ended Investment company
- Assets under management: $46.39 billion
- Dividend yield: 1.43%
- Expenses: 0.03%
The iShares Core S&P Total U.S. Stock Market ETF (ITOT) is an exchange traded fund (ETF) designed to provide investors with diversified exposure to the U.S. stock market as a whole. Features and Benefits of this ETF:
Broad Diversification: the ETF consists of 3,650 stocks of U.S. companies of various capitalizations. This means ITOT owners get broad sector and geographic diversification, which can help reduce concentration risks.
Long-term growth: If an investor expects long-term growth in the U.S. market, ITOT provides an opportunity to invest in the entire market, not just companies in the S&P 500 Index.
Vanguard Short-Term Inflation-Protected Securities ETF (VTIP)
- Type: Open ended Investment company
- Assets under management: $52.9 billion
- Dividend yield: 5.07%
- Expenses: 0.04%
In conditions of steady supply rates, which have recently amounted to about 7.9%, financial markets have faced challenges affecting not only stocks, but also bonds, leading them to an indicator closely correlated with the upcoming meeting. Nevertheless, among these negative dynamics, Treasury securities with anti-utterance protection (TIPS), representing disadvantages, stand out. This type of release, identified in the United States, is indexed taking into account the level of danger, the purpose of which is to protect against the loss of purchasing power of one’s abilities. In accordance with the offer, the prices for TIPS are adjusted, preserving the real value.
Vanguard Value ETF (VTV)
- Type: Open ended Investment company
- Assets under management: $152.91 billion
- Dividend yield: 2.48%
- Expenses: 0.04%
Vanguard Value ETF (VTV) is an exchange-traded fund (ETF) that seeks to track the performance of the CRSP US Large Cap Value Index. This index measures the investment return of large-capitalization value stocks. Here are some key details about VTV:
VTV follows an index-based management style, meaning it aims to replicate the performance of its underlying index rather than actively selecting stocks. VTV belongs to the category of Domestic Stock – General, specifically focusing on Large Value stocks.
Inception Date: The ETF was launched on January 26, 2004.
As of the latest data, VTV has demonstrated a year-to-date return of 2.60%. This return is calculated based on both market price (MP) and net asset value (NAV). The market price of VTV’s shares was $142.19 as of August 23, 2023. This represents a change of $0.90 (0.63%) from the previous day’s market price. The NAV of VTV’s shares was also $142.19 on the same date, with a change of $0.90 (0.64%) from the previous value.
VTV invests in a range of value stocks with characteristics like median market capitalization, earnings growth rate, P/E ratio, P/B ratio, and more.
Invesco S&P SmallCap Information Technology ETF (PSCT)
- Type: Open ended Investment company
- Assets under management: $350.14 million
- Dividend yield: 0.00%
- Expenses: 0.29%
The fund generally invests at least 90% of its total assets in the securities that comprise the S&P SmallCap 600 Capped Information Technology Index. This index is meticulously compiled, maintained, and calculated by S&P Dow Jones Indices, LLC. It is designed to capture the performance of securities of small-capitalization U.S. companies operating in the information technology sector, following the classification set by the Global Industry Classification Standard (GICS).Conclusion
In conclusion, we can say that the 12 selected companies represent an excellent choice for investors who are looking for high profitability and sustainability in a growing market.
These companies have the potential for growth, as they have already established themselves in the market and have strong positions in their industries. They are also reliable investments, as their shares have high liquidity and can be bought and sold on the stock exchange at no great cost.
Before making a decision to purchase shares, it is necessary to conduct a thorough analysis and risk assessment.
Is a small-cap value ETF better than S&P 500?
Small-cap value ETFs are not necessarily better than the S&P 500. They may be a good choice for investors who are looking for a more diverse portfolio or want to invest in smaller companies with high-quality valuations.
What is the best S&P 600 small-cap ETF?
The best S&P 600 ETF for small-caps would depend on the investor’s risk tolerance and investment goals. Some popular choices include iShares Russell 2000 Index ETF (IWM), SPDR S&P SmallCap 600 (SMALL CAP), fund Invesco S&P Small Cap 600 Value (SMCAP).
Are small-cap ETFs worth it?
Small-cap ETFs can be a good investment strategy for investors seeking higher returns, but they also come with higher levels of risk. It’s important to consider the risks and rewards of each investment option before making a decision.
