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iShares Russell 2000 Growth ETF (IWO)
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iShares U.S. Small Cap Index ETF (CAD-Hedged) (XSU)
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iShares Russell 2000 Value ETF (IWN)
I recently heard a suggestion to broaden out of the S&P 500 given its large run up. the presenter suggested value small caps. I hadn't heard of them before. what are they?
what do you think of this presenter's suggestion?
how do they differ from the Russell 2000?
if there an ETF based in CAD?
how have them done in comparison to IWO or IWM?
thanks
Mary
The Russell 2000 is an index of small caps in the US. It can be further split into Value stocks and Growth stocks. Typically, value stocks are cheap, but have slower growth. They may have assets that are undervalued but need a catalyst of some sort (sale or takeover) to bring out value. They may have had prior issues which makes them cheap as investors focus on old problems. They may be in legacy, old industries as opposed to hot and sexy sectors. Value and growth, as investment styles, tend to go in and out of favour on a regular basis. Typically, value stocks can significantly outperform when investors are 'worried' and want more safety. But small caps as a group can be risky as well in such conditions. IWN is a Russell 2000 Value ETF. It's up 7.7% this year and 5-year 7.72%. This compares with IWO, the growth side of the Russell. It is up 13.47% YTD and 7.79% over five years. XSU is a Canadian Russell 2000 ETF but represents the whole index, not just value stocks.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in XSU.