ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Direct Indexing
    • Disruptive Technology
    • Energy Infrastructure
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Financial Literacy
    • Fixed Income
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Multifactor
    • Night Effect
    • Portfolio Strategies
    • Responsible Investing
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
  • Tools
    • ETF Screener
    • ETF Country Exposure Tool
    • ETF Sector Tracker Tool
    • ETF Database Categories
    • Head-To-Head ETF Comparison Tool
    • ETF Stock Exposure Tool
    • ETF Issuer Fund Flows
    • Indexes
    • Mutual Fund To ETF Converter
  • Research
    • ETF Education
    • Equity Investing
    • Dividend ETFs
    • Leveraged ETFs
    • Inverse ETFs
    • Index Education
    • Index Insights
    • Top ETF Sectors
    • Top ETF Issuers
    • Top ETF Industries
  • Webcasts
  • Themes
    • AI ETFs
    • Blockchain ETFs
    • See all Thematic Investing ETF themes
    • ESG Investing
    • Marijuana ETFs
  • Multimedia
    • ETF 360 Video Series
    • ETF of the Week Podcast
    • ETF Prime Podcast
    • Video
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. The Responsible Investing Channel
  2. ESIX: Virtuous Way to Play Rebounding Small-Caps
The Responsible Investing Channel
Share

ESIX: Virtuous Way to Play Rebounding Small-Caps

Tom LydonJun 10, 2022
2022-06-10

Small-cap equity benchmarks, such as the Russell 2000 and S&P SmallCap 600 indexes, have plenty of work to do to reclaim lost glory, but some market observers believe small-caps are offering near- to medium-term rebound potential.

Investors looking to participate in that trend while bringing environmental, social, and governance (ESG) benefits to the table have some exchange traded funds to consider, including the SPDR S&P SmallCap 600 ESG ETF (ESIX B).

ESIX could be worth considering as some analysts turn modestly more constructive on smaller stocks, which endured some turbulence in the first five months of the year. Lori Calvasina, RBC’s head of U.S. equity strategy, upgraded small-caps to neutral from underweight. In a Monday note to clients, Calvasina pointed out improving risk/reward among smaller equities.

“Small Cap looks intriguing or better on our positioning/sentiment, valuation, and earnings work,” Calvasina said. “We are not yet ready to move back to an overweight as Small Cap still faces fundamental headwinds. … It’s also worth noting that Small Caps are starting to look a little better than Large Cap on the earnings front.”

That’s not an overtly bullish endorsement, but it’s not a bearish call, either. Plus, it can’t be ignored that the aforementioned S&P SmallCap 600 — the parent benchmark of ESIX’s underlying index — is beating the S&P 500 by more than 250 basis points year-to-date.

Additionally, there’s the valuation consideration, particularly when it comes to small-cap growth stocks. While ESIX is a small-cap blend fund, plenty of its 405 holdings are considered small growth equities. Indeed, small-cap growth has been a losing combination to this point in 2022, but the upside of that scenario is that small growth fare are inexpensive today relative to historical standards.

In a client note, Alger Director of Market Strategy Bradford Neuman said that small-cap growth names could be interesting ideas in the current climate and “may be the best of both worlds for small-cap growth investors, given that these stocks are less expensive than small-value equities, and they generally also have higher operating margins, return on capital and stronger balance sheets.”

ESIX allocates about 37% of its total weight to the technology, healthcare, and consumer discretionary sectors, indicating that it has some leverage to a potential rebound by small-cap equities.

For more news, information, and strategy, visit the ESG Channel.

Loading Articles...
Our Sites
  • VettaFi
  • Advisor Perspectives
  • ETF Trends
Tools
  • ETF Screener
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Database Pro
More Tools
  • Financial Advisor & RIA Center
Explore ETFs
  • ETF News
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Information
  • Contact Us
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.

Advertisement

Is Your Portfolio Positioned With Enough Global Exposure?

ETF Education Channel

How to Allocate Commodities in Portfolios

Tom LydonApr 26, 2022
2022-04-26

A long-running debate in asset allocation circles is how much of a portfolio an investor should...

Core Strategies Channel

Why ETFs Experience Limit Up/Down Protections

Karrie GordonMay 13, 2022
2022-05-13

In a digital age where information moves in milliseconds and millions of participants can transact...

}
X