small-cap News & Analysis
3 articles
Market Mood
Russell 2000 Index Surges 22% in Best First Half Since 1991
The Russell 2000 Index has increased nearly 22% in 2023, marking its best first-half performance since 1991. This surge is attributed to the rising investment in artificial intelligence infrastructure, benefiting small-cap companies, particularly in the semiconductor sector. Notably, 16 of the top 50 performers are chip-related firms, with some like Aehr Test Systems and Ichor Holdings rallying over 400%. Analysts project a shift in earnings growth expectations for Russell 2000 companies, forecasting a climb to 38% for 2026 from 23% at the year's start, driven by improving fundamentals.
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Vanguard VSS ETF Offers Small-Cap Stocks at Low Valuations
The Vanguard FTSE All-World ex-U.S. Small-Cap Index ETF (VSS) provides exposure to approximately 4,950 small-cap stocks, with an average market cap of $2.1 billion. Currently, the average stock in the portfolio trades at 1.6 times book value, compared to 2.1 times for the Russell 2000 and 4.8 times for the S&P 500. Notably, only 11% of the ETF's assets are in North America, with 33% in Europe, 27% in developed Asia-Pacific, and 28% in emerging markets. The fund also features a low expense ratio of 0.06%, meaning annual fees are just $6 for every $10,000 invested.
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XSHD Dividend Decline: 40% drop in monthly distributions noted
Invesco S&P SmallCap High Dividend Low Volatility ETF (XSHD) has seen a 40% decline in monthly distributions from early 2024, dropping from $0.09 to $0.05346 per share by March 2026. This decline highlights issues faced by its top holdings, which include Innovative Industrial Properties (3.5%), Cal-Maine Foods (3.3%), and Arbor Realty Trust (3%). The fund's yield stands at 5.42%, attracting income-focused investors, despite a significant underperformance relative to peer small-cap value ETFs, achieving only a 4.72% price return over five years compared to 22-41% by peers. The downturn in payouts poses concerns for dividends' reliability in the current market environment.
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