Small Cap ETFs Are Up, But What About Small Businesses?

Includes: EES, IWC, IWM, PZI, SCHA
by: Tom Lydon

Small cap exchange traded funds are up 15% in the last six months, compared to large caps, which are up about 10% in the same time frame. So, why are small business owners becoming less optimistic instead of more?

The NFIB (National Federation of Independent Business) survey’s “Plan to Hire” component has dropped. Does this mean that new jobs will only be coming from the largest companies and the U.S. government? Gary Gordon for ETF Expert says that not only are small businesses finding it difficult to obtain credit, they intend to reduce planned capital expenditures and delay or reduce planned hiring.

What gives? Whatever small business owners have been feeling, small-cap ETFs haven’t been reflecting it. Wall Street, as has been the pattern in this recovery, seems to be moving faster into recovery mode than the rest of America. [Why Small-Caps Outperform.]

That said, small and micro cap ETFs are on an uptrend right now and you can’t fight it. But if small business owners’ intuition is on target, be ready with a stop-loss in place.

For more stories about small-caps, visit our small cap category.

  • Schwab U.S. Small-Cap (NYSEARCA:SCHA)

  • iShares Russell 2000 Index (NYSEARCA:IWM)

  • iShares Russell Microcap Index (NYSEARCA:IWC)

  • PowerShares Zacks Micro Cap (NYSEARCA:PZI)

  • WisdomTree SmallCap Earnings (NYSEARCA:EES)