Small caps have seen tremendous growth in recent weeks, outpacing the mega caps that have dominated market returns in 2023.
The small-cap benchmark Russell 2000 Index entered positive territory for the year just a few weeks ago and is now up 8.6% as of December 11. Meanwhile, the ALPS O’Shares US Small-Cap Quality Dividend ETF (OUSM ) is seeing even larger year to date returns, supported by its high quality approach.
OUSM has climbed 7.6% in the past month, while the iShares Russell 2000 ETF (IWM ) is up 10.7% during the same period. Year to date through December 11, OUSM is up 13.5% while IWM has gained 8.6%.
Compared to IWM, OUSM takes a more conservative approach to investing in small caps. The fund is designed to provide cost-efficient access to a portfolio of small-cap, high-quality, low-volatility, dividend-paying companies in the U.S.
The current environment could be an attractive entry point for an allocation to small caps. While small caps have seen compelling returns in recent weeks, the asset class is still available at a discount. Small caps are currently cheap from both a historical perspective and in comparison to large-cap stocks.
The fund aims to provide strong performance with less risk than a market cap-weighted approach. Quality dividend growth strategies are designed to reduce risk and exposure to stress events by avoiding lower-quality stocks.
Recent Flows Into OUSM
OUSM has recently garnered significant investor attention. The fund has seen $17 million in net flows over the past month and $53 million in net flows over the past three months. Year to date through December 11, the fund has accreted $205 million.
OUSM has $409 million in assets under management and charges a 48-basis point expense ratio.
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