ETF Talk: Small-Cap Shows Surprising Strength

Doug Fabian

Doug Fabian is known for his expert knowledge of ETFs, bear funds and enhanced index funds to profit in any market climate.

When markets turn upward as they have lately, small-cap stocks typically can be counted on to produce bigger gains than their large-cap counterparts. The trend is reflected once again during the past few months as iShares S&P SmallCap 600 Index ETF (IJR) has climbed above its 50-day and 200-day moving averages.

The iShares S&P SmallCap 600 Index Fund seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of U.S. small-cap stocks, as represented by the Standard & Poor’s SmallCap 600 Index.

If you like well-diversified funds that are not overly dependent on any one sector or company, IJR fits the description with 602 holdings. The fund’s largest sector, as of March 27, was financials, with 19.85% of the portfolio; followed closely by information technology, 19.02%; consumer discretionary, 15.82%; industrials, 15.55%; and health care, 10.88%.

The top 10 holdings and their weights in the portfolio, also on March 27, were: Kilroy Realty Corp, 0.62%; Salix Pharmaceuticals Ltd, 0.61%; Biomed Realty Trust Inc., 0.57%; Cubist Pharmaceuticals Inc., 0.54%; Tanger Factory Outlet Center, 0.53%; Proassurance Corp, 0.53%; Extra Space Storage Inc., 0.52%; Mid-America Apartment Comm., 0.52%; Lufkin Industries Inc., 0.51%; and Questcor Pharmaceuticals, 0.48%.

The fund’s average annualized total returns for the past year are a slight gain of 0.90%, but for the past three years the fund has climbed 16.89%, a performance that reflects the rising tide in the markets since the Great Recession hit. So far in 2012, the fund is up 10.37%, including a March 25 dividend payment of 22.4 cents per share.

As always, I am happy to answer your questions about ETFs, so do not hesitate to email me by clicking here. You just may see your question answered in a future ETF Talk.

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