Despite market volatility, this small cap ETF has led Invesco fund flows
Small-cap stocks can make amplified moves in the market, which may not be the best option in a downturn, but despite the latest market volatility, an ETF has led Invesco’s fund flows. last week.
In particular, it is the IShares Russell 2000 ETF (IWM) at the top of the ranking. On the performance side, the fund is up around 13% over the year.
IWM seeks to replicate the investment results of the Russell 2000® Index, which measures the performance of the small cap sector of the US stock market. The fund generally invests at least 90% of its assets in securities of the underlying index and in certificates of deposit representing securities of the underlying index.
It may invest the remainder of its assets in certain futures, options and swaps, and in cash and cash equivalents, as well as in securities not included in the underlying index, but which the advisor believes will help the fund to track the underlying index. With its relatively low expense ratio of 0.19%, IWM offers investors:
- Exposure to small U.S. public companies
- Access to 2,000 domestic small cap stocks in a single fund
- Ability to diversify an allocation of US equities and seek long-term growth in a portfolio
More volatility to come?
Rising yields have been responsible for much of the market volatility this week. However, another bucket of volatility could be dumped on the markets, as federal government funding is a topic of discussion on Capitol Hill.
As it avoids a government shutdown to push trillion-dollar infrastructure through the House of Representatives, Capitol Hill could grab the attention of investors as they read the pulse of the stock market.
“The climate in Washington is such that you cannot rule out the possibility of a deadlock that ends in something really, really bad, and the market is not anticipating it,” he added. noted Scott Clemons, CIO at Brown Brothers Harriman.
“We have seen this dance so many times. We’re used to it being awkward but ending well, ”Clemons added. “The heightened tension in Washington is such that there is a non-zero probability that something will really go wrong and cause substantial price volatility in the markets.”
While small-cap stocks can make amplified moves in the market, IWM’s 30-day rolling volatility has been maintained relative to larger funds like Invesco QQQ.
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