Same Universe, Different Results for Small Cap ETFs

Not all ETFs are created equal and that is especially true for a pair of small cap ETFs according to Smart Money‘s Daren Fonda.

In the article, Mind the Gap: Similar ETFs, Different Returns, Fonda points out that iShares S&P SmallCap 600 (IJR) and iShares Russell 2000 (IWM) follow the same broad class of stocks but have varied widely in return.

The index tracked by the S&P fund is up 56% over the past nine years while the Russell index has returned just 23%. Turns out that the Russell index includes a larger group of small-cap stocks while S&P starts with the same universe, but then selects companies based on liquidity, industry representation and profitability.

Be Sociable, Share!

,

Powered by WordPress. Designed by Woo Themes