Small caps had their first historic week in just over three years, and exchange-traded fund experts predict the group’s record highs will help drive investors back to the group.
“Small caps are going to be out of favor in 2025,” Wetafi’s Todd Rosenbluth said on CNBC. “ETF Edge” This week. “Since the election they’ve started to make headway and are going into the election as interest rates are coming down.”
Rosenbluth, the firm’s head of research, expects ETF funds specializing in small caps to reap the benefits of investors looking to expand their market exposure.
The Russell 2000Tracks small-cap stocks, this week hit its first record high since November 2021 and saw its best monthly performance since last December. The index is up nearly 11% in November and 35% over the past 52 weeks through Friday’s close.
Rosenbluth suggests taking some of the benefits “Magnificent seven“Stocks, that includes Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta platforms And TeslaFavors small caps. They expect investors to move out of money market accounts due to the effects of the Federal Reserve’s interest rate easing policy.
“We expect some more dispersion among the winners,” Rosenbluth said.
Quoted by Rosenbluth iShares Core S&P Small-Cap ETF and the VictoryShares Small Cap Free Cash Flow ETF As potential ways to play strength in small caps. The core S&P small-cap ETF was up 11% in November, while the Victory Shares fund was up nearly 8%.
