Small caps just had their first historic week in three years, and one exchange-traded fund expert predicts the record high will help push investors back into the stock.
“Small-cap stocks are going to be more popular in 2025,” VettaFi’s Todd Rosenbluth said this week on CNBC’s “ETF Edge.” “Since the election, as interest rates have come down, they’ve started to perk up.”
Rosenbluth, the firm’s head of research, expects ETF funds specializing in small-cap stocks to benefit from investors looking to expand their exposure to the market.
this Russell 2000The index tracking small-cap stocks hit its first all-time high since November 2021 this week and is coming off its best monthly performance since December. The index gained nearly 11% in November and was up 35% in the past 52 weeks as of Friday’s close.
Rosenbluth recommends some profit-taking on the “big seven” stocks, including apple, Microsoft, letter, Amazon, NVIDIA, meta platform and Teslawill favor small-cap stocks. He also expects investors to withdraw from money market accounts due to the impact of the Federal Reserve’s interest rate cuts.
“We expected the winners to be more spread out,” Rosenbluth said.
Rosenbluth cited iShares Core S&P Small Cap ETF and the VictoryShares Small Cap Free Cash Flow ETF as potential ways to leverage the strength of small cap stocks. In November, the Core S&P Small-Cap ETF gained 11%, while the VictoryShares fund gained nearly 8%.
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