Everyone has a take on the ongoing discourse on rate cuts. Whether the Fed will drop a rate cut at its next meeting or slow-roll them with just one this year and more next, investors are looking at their options. If, as recently signaled, the Fed is planning on moving into cuts sooner than even most optimists had expected, investors may want to consider their ETF options. One small-cap ETF in particular stands out, sending a key buy signal, per its recent tech chart action.
See more: Bull vs. Bear: Thinking Big on Small-Caps
The ALPS O’Shares U.S. Small-Cap Quality Dividend ETF (OUSM ) could prove itself an option. The small-cap ETF applies a quality standard to its investing universe. It also screens out small-cap firms based on dividend yield and quality. That combination of EBITDA and dividend quality can identify healthy small-cap names.
Those small-caps could be poised to benefit disproportionately from rate cuts. Smaller firms, especially the growthier kind, start out taking on significant debt. In tech, for example, small-caps often don’t deliver revenue for quite some time, leading to those loans. Rate cuts could help firms in positions like this. The small-cap ETF OUSM, specifically, by finding names already meeting quality standards, could benefit even more from rate cuts for those standout small firms.
At the same time, OUSM is sending a notable buy signal, per its technical chart. According to YCharts, the small-cap ETF recently saw its price spike above its 50-day simple moving average (SMA). Its price now sits at $42.94 compared to $41.44 for its 50-day SMA.
VettaFi LLC (“VettaFi”) is the index provider for OUSM, for which it receives an index licensing fee. However, OUSM is not issued, sponsored, endorsed, or sold by VettaFi, and VettaFi has no obligation or liability in connection with the issuance, administration, marketing, or trading of OUSM.
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