Micro Caps Are Starting To Outperform Small Caps

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January 3, 2017 12:18pm NYSE:IWC

One of the biggest stories in the market last year was the tear that Small-Cap U.S. equities went on following the election of Donald Trump as president.


We see the largest benchmark ETF there, IWM (iShares Russell 2000, Expense Ratio 0.20%), pulling in more than $1 billion in the trailing one month period alone, and the underlying index registering over 20% gains in the trailing one-year period. This is nearly double what Large-Cap stocks, as measured by the S&P 500, have turned in during this same time period.

If Small-Caps have prospered lately, how have their little cousins the “Micro-Caps” fared? We look to IWC (iShares Micro-Cap, Expense Ratio 0.60%, $856 million in AUM), which is the largest fund in the space in terms of asset size, and we see similar performance in the trailing one-year period as the Small-Cap Russell 2000 (up roughly about 20%). However, Micro-Caps have been playing “catch-up” in the trailing one month-period and three-month periods head to head versus Small-Caps, and “Trumping” their performance during these time frames.

IWC-2017-01-03

IWC is substantially larger than the next biggest funds in the space, FDM (First Trust Dow Jones Select MicroCap, Expense Ratio 0.60%, $117 million in AUM) and PZI (PowerShares Zacks Micro Cap, Expense Ratio 0.91%) which only has $33.7 million in assets under management.

The iShares Russell Microcap Index (ETF) (NYSE:IWC) was trading at $85.71 per share on Tuesday morning, down $0.13 (-0.15%).

IWC currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #8 of 29 ETFs in the Small Cap Blend ETFs category.


Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch

paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and ETFTrends.com for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.


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