#7 - iShares Russell 2000 ETF (NYSEARCA:IWM)
As interest rates moved higher, mid-cap and small-cap stocks were among the most impacted. That’s because many of these companies still have to fund their growth with debt. Higher interest rates meant higher borrowing costs, which has an impact on earnings.
However, as we move into a lower interest rate environment, these beaten-down stocks stand to be the biggest beneficiaries. Instead of trying to pick individual stocks, you can consider the iShares Russell 2000 ETF (NYSEARCA: IWM). The fund has been up more than 20% in the last 12 months as investors begin to shift away from large-cap stocks.
The market-cap-weighted fund is indexed to the Russell 2000 Index. Importantly, none of the fund’s holdings carries more than 0.55% of the fund’s weight and 92% of the fund’s holdings are those of U.S. companies.
Unlike many of the ETFs on this list, the iShares Russell 2000 ETF is specifically for growth-oriented investors. As such, the fund doesn’t pay a dividend.
About iShares Russell 2000 ETF
iShares Russell 2000 ETF (the Fund) is an exchange-traded fund. The Fund seeks investment results that correspond generally to the price and yield performance of the Russell 2000 Index (the Index). The Index is a float-adjusted capitalization weighted index that measures the performance of the small-capitalization sector of the United States equity market and includes securities issued by the approximately 2,000 smallest issuers in the Russell 3000 Index.
Read More - Current Price
- $223.97
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 8 Buy Ratings, 14 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $232.86 (4.0% Upside)
As you can see, ETFs have many benefits for investors who want to take a more passive approach to growing their wealth. And many investors do quite well with this strategy. But one concern for ETF investors is that you have to take the “trash" along with the “treasure."
This is because a fund's holdings are tied to a specific index. And that means that it may include stocks that are underperforming the market. A fund can change its holdings as the index rebalances, but that's usually done quarterly.
However, if you're looking to grow your investments over time, you shouldn't put too much weight on quarterly performance. After all, a stock that's underperforming one quarter may be an outperformer in subsequent quarters.
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