Small-Cap ETFs Near 2007 High

Includes: IJR, IWM, VB
by: Tom Lydon

Exchange traded funds (ETFs) that invest in U.S. small-cap stocks are closing in on their 2007 high as the economy gradually improves, although they followed the broader market lower Tuesday.

With nearly $17 billion in assets, iShares Russell 2000 Index Fund (NYSEArca: IWM) is the most popular ETF for U.S. small caps.

iShares Russell 2000

“The small caps have been providing leadership over the past few weeks and that is bullish for the market in general as it implies an offensive rotation,” Investors Intelligence said.

The market segment has recouped all the losses it suffered after peaking in February.

For the 12 months ended April 11, iShares Russell 2000 was up about 20%, compared with a roughly 13% gain for the S&P 500 Index, according to Morningstar.

ETFs for the small-cap portion of the U.S. market include:

  • iShares Russell 2000 Index Fund (NYSEArca: IWM). IWM tries to reflect the performance of the small-cap sector of the U.S. equities market through the Russell 2000 Index. Top holdings include: TIBCO Software 0.35%, VeriFone System 0.35%, Riverbed Technology %0.34, Rackspace Hosting 0.33% and Brigham Exploration 0.33%. The fund has 1969 holdings and has an expense ratio of 0.28. IWM is up 4% in the last month.
  • Vanguard Small-Cap ETF (NYSEArca: VB). VB tries to reflect the performance of the MSCI U.S. Small-Cap 1750 Index. Top holdings include: Human Genome Sciences 0.43% CMT Market Liquidity Rate 0.38%, Valeant Pharceutical Internali 0.32%, Whiting Petroleum Corporation 0.29%, Core Labratories N.V. 0.28%. The fund has 1722 holdings and has an expense ratio of 0.14%. VB is up 3.8% in the last month.
  • iShares S&P SmallCap 600 (NYSEArca: IJR). IJR tries to reflect the performance of U.S. small-cap stocks represented by the Standard & Poor’s SmallCap 600 Index. Top holdings include Oil States International 0.77%, Regeneron Pharmaceuticals 0.51% Amerigroup Corp. 0.60%, Lufkin Industries 0.55% and World Fuel Services 0.53%. The fund has 601 holdings and has an expense ratio of 0.20%. IJR is up 3.7% in the last month.

Max Chen contributed to this article.

Disclosure: Tom Lydon’s clients own VB.