Small-cap ETFs—the best choice for novice investors today！
If you're interested in my content,please follow me!！
As market expectations for the Federal Reserve to cut interest rates next year continue to rise, small-cap stocks, which have lagged for most of 2023, are shining again, with the Russell 2000 index of U.S. small-cap stocks jumping more than 13% from its October low.
Secondly, as global stock markets rebounded on the back of the end of the interest rate hike cycle, investors bet on the ability of small-cap stocks with low valuations to outperform the market. After the last time the Federal Reserve raised interest rates in history, the average annual gain of the Russell 2000 Index reached 18.4 %.
Small Cap Drivers:
If the economy remains stable or improves in 2024, the cyclical nature of the small-cap asset class could prove beneficial. Small-cap stocks may decline less than mid-cap and large-cap stocks during adverse market conditions. However, they have the potential to soar when market sentiment is positive.
Small-cap ETFs are exchange-traded funds that focus on investing in small companies with a market capitalization of less than $2 billion. These small companies are relatively small compared to mid-sized and even large companies with market capitalizations of $10 billion. Therefore, choosing to invest in a small-cap ETF is clearly about covering a range of small businesses in one investment.
Risk factors:
1. Small-cap stocks tend to have higher volatility. The annualized volatility over the past five years has reached 24.6%, which is much higher than the 19.5% volatility of the Russell 1000 Index.
2. Unprofitable companies are common. A report released by Apollo Global Management in mid-November pointed out that about 40% of the Russell 2000 index constituent companies are in a state of loss.
$Tesla(TSLA.US$ $Apple(AAPL.US$ $AMC Entertainment(AMC.US$ $Amazon(AMZN.US$ $Microsoft(MSFT.US$ $Netflix(NFLX.US$ $Meta Platforms(META.US$ $NVIDIA(NVDA.US$ $S&P 500 Index(.SPX.US$ $E-mini NASDAQ 100 Futures(JUN4)(NQmain.US$ $Russell 2000 Settlement Value(.RLS.US$ $Russell 2000 Index(.RUT.US$ $Alphabet-A(GOOGL.US$
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
Read more
Comment
Sign in to post a comment
Piggy Bank Trader : How about I block you! 50 yr old man with a 28 yr old girl as a pic trying to gain followers!
Shootingstar : Can you pls teach me how it is different if I buy etf vs owning a share? It will become like Berkshire?
FirstStrike Veteran Shootingstar: You can own a share of a company, or you can own a share of an ETF, which is made up of many companies. ETF's have an array of different choices.
Shootingstar FirstStrike Veteran: But the etf lacks flexibility and agility to change when it's focus is having difficulty from economic changes and news? Once an etf is setup it is fixed to certain types of shares only?
FirstStrike Veteran Shootingstar: that depends. some etfs update more often than others, but etfs have a governing group of people. SPY is an etf of the s and p 500, you can find etfs with array of different companies in it or and etf that has a certain sector.
Ava QuinnOP Shootingstar: I will share a series of research on ETFs later, stay tuned!
Ava QuinnOP FirstStrike Veteran: Yes, that's one of the differences
Shootingstar : Sorry for my harsh post I regret posting it and thank you for some info