ETFdb Logo
ETFdb Logo
  • ETF Database
  • Channels
    • Active ETF
    • Beyond Basic Beta
    • China Insights
    • Climate Insights
    • Commodities
    • Core Strategies
    • Crypto
    • Disruptive Technology
    • Energy Infrastructure
    • ETF Building Blocks
    • ETF Education
    • ETF Strategist
    • Fixed Income
    • Free Cash Flow
    • Gold/Silver/Critical Minerals
    • Innovative ETFs
    • Institutional Income Strategies
    • Leveraged & Inverse
    • Managed Futures
    • Market Insights
    • Modern Alpha
    • Night Effect
    • Portfolio Strategies
    • Retirement Income
    • Richard Bernstein Advisors
    • Tax Efficient Income
    • Volatility Resource
  • 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
    • ETF Data for Journalists
    • ETF Nerds
  • 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 Trends on Videos
    • ETF Trends on Podcasts
    • ETF Prime Podcast
  • Company
    • About VettaFi
    • Get VettaFi’ed
  • PRO
    • Pro Content
    • Pro Tools
    • Advanced
    • FAQ
    • Pricing
    • Free Sign Up
    • Login
  1. Portfolio Strategies Channel
  2. Wade Back Into Small-Caps With Equal-Weight
Portfolio Strategies Channel
Share

Wade Back Into Small-Caps With Equal-Weight

Tom LydonFeb 02, 2022
2022-02-02

Small-cap stocks languished through a dismal January. If not for a notable surge on the final trading day of the month, January 2022 would have gone on record as one of the worst starts to a year for small-cap equities.

Investors are understandably jittery about smaller stocks, particularly at a time when markets are overtly signaling that lack of profitability — a condition afflicting many smaller firms — isn’t a desirable trait. However, there are avenues for nibbling at small-caps while reducing risk. One such avenue is the Invesco S&P SmallCap 600 Equal Weight ETF (EWSC C+).

EWSC tracks the S&P SmallCap 600 Equal Weight Index — the equal-weight derivative of the popular S&P SmallCap 600. The equal-weight ETF could be worth considering following a rough January.

“Small-caps have been around a lot longer than 1986, however. Jefferies’ Steven DeSanctis notes that the firm’s small-cap basket was down 12% at its worth level last week, a loss that would have been its worst for January going back to the beginning of the data set in 1945,” reports Jacob Sonenshine for Barron’s.

EWSC is already proving its mettle in 2022, outperforming cap-weighted ETFs following the S&P SmallCap 600 Index by about 80 basis points. Alright, so a month and a day isn’t an impressive track record of out-performance, but investors should consider the fact that in 2021, EWSC beat cap-weighted rivals by 540 basis points.

Adding to the allure of EWSC this year is earnings growth. While earnings expectations for the S&P 500 are being reined in, that’s not necessarily the case for small-cap benchmarks.

“Earnings are a key reason. The iShares Russell 2000 exchange-traded fund (IWM) is expected to see earnings per share, in aggregate, grow at 26% on average for the next two calendar years, according to FactSet. In fact, during the recent selloff, analysts have barely changed their profit forecast. The expected 2022 EPS figure for the fund has fallen 0.36% year-to-date, but risen 2.7% for 2023,” according to Barron’s.

EWSC has another benefit: It’s not excessively allocated to growth stocks, the corner of the market that appeared highly vulnerable last month. With a roughly 48% combined weight to the financial services, industrial, and consumer discretionary sectors, EWSC has a cyclical value feel, which could be prove useful as 2022 moves forward.

For more news, information, and strategy, visit the Portfolio Strategies Channel.

Loading Articles...
Help & Info
  • Contact Us
Tools
  • ETF Screener
  • ETF Analyzer
  • Mutual Fund to ETF Converter
  • Head-To-Head ETF Comparison
  • ETF Country Exposure Tool
  • ETF Stock Exposure Tool
  • ETF Performance Visualizer
  • ETF Database Model Portfolios
  • ETF Database Realtime Ratings
  • ETF Database Pro
More Tools
  • ETF Launch Center
  • Financial Advisor & RIA Center
  • ETF Database RSS Feed
Explore ETFs
  • ETF News
  • ETF Picks of the Month
  • ETF Category Reports
  • Premium Articles
  • Alphabetical Listing of ETFs
  • Best ETFs
  • Browse ETFs by ETF Database Category
  • Browse ETFs by Index
  • Browse ETFs by Issuer
  • Compare ETFs
Legal
  • Terms of Use and Privacy Policy
  • © 2023 VettaFi LLC. All rights reserved.
Follow ETF Database
Follow ETF Database

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