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Most of the market attention remains with the technology sector today, where all of 2024 has been centered around every stock related to artificial intelligence, particularly those in the chip and semiconductor space. When reading this, most investors probably thought of NVIDIA Co. NASDAQ: NVDA and other names in that space, but that wave could soon be over.
iShares Russell 2000 ETF provides exposure to 2,000 U.S. small-cap companies, replicating the Russell 2000 Index. Vanguard Small-Cap ETF outperformed IWM and Schwab U.S. Small-Cap ETF since 2015; however, will it continue? Small-caps are a good allocation with potential for growth, especially with possible rate cuts in the future.
While index-based ETFs are known to be passive compared to active ETFs, changes indeed occur. At the end of this week, a large-cap growth ETF with approximately $100 billion in assets will be adding and removing companies.
Overall, ETFs pulled in $12.8 billion in capital last week, pushing the year-to-date inflows to $324.7 billion.
Last week was a busy one for ETFs, with nine new ETFs launching on the first day of the week alone. Calamos, Innovator, AllianzIM, Direxion, Global X and ProShares were among the issuers rolling out new funds.
On Wednesday, Global X launched the Global X Russell 2000 ETF (RSSL) on the NYSE Arca. “Small-cap investments can help investors gain exposure to new and innovative growth opportunities and diversify their core equity allocations,” noted Rohan Reddy, Global X ETFs' director of research.
As the three major bourses are hovering near record highs, investors are rotating to areas like utility and the small-caps, which are cheap and undervalued.
Despite an uptick in activity during the prior week, last week in the wake of the Memorial Day holiday saw the debut of just five new ETFs and the completion of one closure.
The popular Russell indexes are set to get the customary new look this month. ETFs targeting the Russell Indices are currently in focus.
Small-cap stocks have underperformed compared to the S&P 500 due to persistent inflation and fading expectations for rate cuts. iShares Russell 2000 ETF tracks the Russell 2000 Index and offers exposure to U.S. small-cap stocks. The outlook for small-cap stocks has deteriorated, and the risk/reward setup does not currently warrant a Hold rating.