"The stock market is shifting away from a few dozen tech and mega-cap winners into stocks that have been under-the-radar and left behind. We're still early in this trend, and buying small-cap ETFs like the Vanguard Small-Cap Index Fund ETF (NYSEARCA:VB), Avantis International Small Cap Value ETF (NYSEARCA:AVDV), and Schwab Fundamental US Small Company ETF (NYSEARCA:FNDA) can set you up for great gains."
"Small-cap stocks are getting love specifically because earnings growth is broadening beyond the 'Magnificent Seven,' and some of these companies are managing to carve out niches and become picks and shovel trades. Not only that, but interest rates are finally coming down and are expected to come down more. This directly helps small-cap stocks perform better."
"The Vanguard Small-Cap Index Fund ETF is one of the cheapest ETFs you can buy right now, with an expense ratio of just 0.03%. The yield is also not that bad for the gains you are getting, as the 30-day SEC yield is at 1.3%. VB stock is up nearly 7% year-to-date, and that's better than what most tech stock ETFs will get you."
The stock market is experiencing a rotation away from a concentrated group of large-cap technology companies toward small-cap stocks that have been overlooked. This shift reflects changing market conditions rather than broad market movement. Small-cap stocks benefit from broadening earnings growth beyond the Magnificent Seven and declining interest rates, which historically support their performance. Three small-cap ETFs offer attractive opportunities: Vanguard Small-Cap Index Fund ETF features a 0.03% expense ratio and broad diversification across industrials and other sectors; Avantis International Small Cap Value ETF provides international exposure; and Schwab Fundamental US Small Company ETF offers fundamental-based selection. These funds position investors to capitalize on the early stages of this market rotation.
Read at 24/7 Wall St.
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