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Investors Are Taking Profits In The Small Cap ETF’s

November 16th, 2009

take-profits“Investors are pulling money out of small-cap exchange-traded funds as the group shows signs of weakening, and that could spell trouble for the U.S. market overall. Small-cap stocks and other riskier sectors that felt hardest in the market meltdown have regained the most ground in the powerful rally that kicked off in March. Yet small-caps recently have yielded leadership to their larger counterparts. This has some market watchers concerned that the rally which has pushed the Dow Jones Industrial Average up by more than 50% is growing long in the tooth,” John Spence Reports From The WSJ.

 ”It appears that some investors were looking to lock in profits on their broad small-cap holdings following the group’s strong outperformance throughout the market’s recent rally,” said John Gabriel, an ETF analyst at investment researcher Morningstar Inc. “Many are starting to question the sustainability of the trajectory that higher-beta names have enjoyed over the past several months,” he added

“For example, a popular ETF tracking small-cap stocks, iShares Russell 2000 Index Fund (IWM), saw more than $1 billion in outflows in October, after bringing in $2.2 billion in new assets the previous three months, Gabriel noted. The ETF has about $12 billion in assets, according to Barclays Global Investors. For the month ended Nov. 12, iShares Russell 2000 ETF was down 5.3%, trailing the S&P 500 Index (SPX), which measures U.S. blue-chip stocks, by more than six percentage points,” Spence Reports.

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The investment (IWM) seeks investment results that correspond generally to the price and yield performance of the Russell 2000 index. The fund invests at least 90% of assets in the securities of the underlying index. It uses a representative sampling strategy in order to track the Russell 2000 index, which measures the performance of the small-capitalization sector of the US equity broad market. The fund invests in approximately 2000 of the smallest capitalization-weighted companies in the Russell 3000 index.

TOP 10 HOLDINGS ( 2.65% OF TOTAL ASSETS)  
 
Company Symbol % Assets
BALLY TECHNOLOGIES (BYI) 0.23
HIGHWOODS PRPTY INC (HIW) 0.25
Human Genome Sciences, Inc. (HGSI) 0.34
MFA FINANCIAL INC. (MFA) 0.25
Palm, Inc. (PALM) 0.27
Perot Systems Corporation N/A 0.29
Polycom, Inc. (PLCM) 0.25
Skyworks Solutions, Inc. (SWKS) 0.25
SOLERA HOLDINGS INC (SLH) 0.24
TUPPERWARE BRANDS CP (TUP) 0.28

Chart for iShares Russell 2000 Index (IWM)

 

 

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