Many investors have parked significant assets in cash over the last year, farming significant yields therein. Of course, with rate cuts having arrived, the cash outlook has changed. Indeed, it may be worth moving those cash assets back into equities that can benefit from cuts as much as yields have dropped. Small-cap ETFs, in particular, can benefit, with three small-cap ETFs in particular poised to end the year on a strong note.
See more: The Underrated ETF Beating the S&P 500 by Double Digits
The Avantis U.S. Small Cap Value ETF (AVUV ), for example, has been a stand-out this year. The fund entered 2924 at just about $9 billion in AUM, per YCharts, and has now risen above $14 billion as of Oct. 25.
The strategy has returned 10.3% over the last three years, beating its benchmark’s 3.8%, per Avantis Investors. Its tech chart shows continued, healthy momentum, with its price above both its 200- and 50-day simple moving averages. For a 25 basis point (bps) fee, AVUV looks for small-cap value firms based on fundamental screens via metrics like cash flow and shares outstanding.
Elsewhere among small-cap ETFs, the Avantis International Small Cap Value ETF (AVDV ) provides a global view into the space. Should a soft landing boost the overall global economy, diversifying into international small-caps’ upside could appeal.
AVDV charges a 36 bps fee to offer that exposure, marking five years of investing last month. AVDV actively invests in small-cap foreign names with similar screens to those used by AVUV. In doing so, it has returned 15.3% YTD, per Avantis Investors data, beating its benchmark’s 11.5% return.
Finally, perhaps the most intriguing among small-cap ETFs, the Avantis Emerging Markets Small Cap Equity ETF (AVEE ) recently arrived on the scene. AVEE charges a 42 bps fee. It actively invests in small-caps in emerging markets. Seeking diversified exposure to small-caps in emerging markets, it also applies fundamental criteria to screen firms. AVEE has returned 5.6% over the last month, beating its benchmark’s 3.7% over one month.
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