iShares Russell 2000 ETF (IWM) Not The Only Fish In The Small Cap Sea

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June 1, 2017 11:01am NYSE:IWM

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Yesterday’s action in Small Cap stocks was interesting at the very least, with the largest ETF in the space IWM (iShares Russell 2000, Expense Ratio 0.20%, $34.9 billion in AUM) temporarily blitzing through the $135 level only to recover substantially to current levels.

Year-to-date, asset flows have not been favorable for IWM, as the fund has seen nearly $4 billion leave via redemption pressure, and lately we have also seen some June 135 put buyers in the name with several weeks left until options expiration.

The second largest U.S. Small-Cap Equity fund, IJR (iShares Core S&P Small-Cap, Expense Ratio 0.07%, $29.6 billion in AUM), has made up substantial ground on IWM year-to-date in terms of competitive fund size, having attracted more than $3.4 billion in assets via creation during a time where IWM has seen outflows. IJR of course was not isolated from the “flash” sell-off or “mini-crash” that we spoke of in IWM yesterday in our ETF/Index options recap, as a quick glance at an intraday chart from yesterday in the name will point out.

Nonetheless, IWM is the much more heavily traded of the two funds averaging more than 29 million shares on a trailing three-month basis as compared to IJR’s 3.2 million shares, and IWM options are among the most popular listed ETF options across the landscape, while IJR’s options do not trade regularly nor in size.

What looks like short term bearish sentiment in the Small Cap Equity space always causes us to closely watch the “Bear Levered” Equity names TZA (Direxion Daily Small Cap Bear 3X, Expense Ratio 1.10%, $706 million in AUM) and the $170 million TWM (ProShares UltraShort Russell 2000, Expense Ratio 0.95%).

Given TZA’s current asset size, the fund has seen impressive creation activity year-to-date, with more than $217 million flowing into the ETF on apparent bearish appetite for Small-Caps. Meanwhile, TWM has participated to a lesser degree with $38 million arriving in new assets during this time frame.

We like to examine the top holdings in the Russell 2000 from time to time, noting which names may be powering (or perhaps taking down the index), and we see the following on the top end: 1) AMD (0.45%), 2) TTWO (0.40%), 3) CC (0.39%), 4) COHR (0.32%), 5) LOGM (0.31%), 6) MSCC (0.30%), 7) XPO (0.28%), 8) OLN (0.26%), 9) NRZ (0.276%), and 10) AZPN (0.26%).


The iShares Russell 2000 Index ETF (NYSE:IWM) was trading at $137.08 per share on Thursday morning, up $0.76 (+0.56%). Year-to-date, IWM has gained 1.65%, versus an 8.20% rise in the benchmark S&P 500 index during the same period.

IWM currently has an ETF Daily News SMART Grade of A (Strong Buy), and is ranked #1 of 31 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 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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