Small cap shares have been left within the mud by this 12 months’s megacap tech rally, however at the very least one ETF of smaller corporations is holding its personal. Financial institution of America ETF strategist Jared Woodard stated in a be aware to purchasers Tuesday that there’s one small cap ETF particularly that “cuts out the junk” and is outperforming its benchmark. “Traders can diversify into smaller shares with out proudly owning the struggling corporations. The Pacer US Small Cap Money Cows 100 ETF (CALF) owns corporations with excessive free money stream, a key measure of high quality,” Woodard stated. The CALF ETF works by figuring out the 100 shares within the S & P Small Cap 600 index with the best free money stream yield. It is a small cap model of the favored Pacer US Money Cows 100 ETF (COWZ) . The small-cap fund’s prime holdings embody American Eagle Outfitters and Encore Wire Corp . The technique of specializing in money stream has labored dramatically effectively this 12 months. CALF has a complete return of 11.4% 12 months thus far, though it has stumbled since its latest highs in August. In the meantime, the iShares Russell 2000 ETF (IWM) has dropped 4%, and the Vanguard S & P Small-Cap 600 ETF (VIOO) is down by 5%. CALF, which has $3.9 billion in property beneath administration, has outperformed even with a comparatively excessive 0.59% administration payment. CALF YTD mountain The CALF ETF has outperformed bigger small cap funds this 12 months. The Financial institution of America be aware that highlighted CALF was aimed toward searching for ETFs that would assist buyers put cash to work with out gaining extra publicity to giant cap tech shares like Nvidia which have come to dominate the S & P 500. “Many inventory portfolios are skewed > 60% to progress shares. ETFs like these can diversify,” Woodard stated. — CNBC’s Michael Bloom contributed reporting.
