If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the Vanguard Russell 2000 ETF (VTWO), a passively managed exchange traded fund launched on 09/22/2010.
VTWO is a low-cost Vanguard ETF tracking the volatile Russell 2000 Small Cap Index, with potential for high returns but also sharp corrections. VTWO's expense ratio is 0.07%, lower than many peers, but SCHA and VB offer even lower fees and are highly correlated alternatives. VTWO has underperformed other small-cap benchmarks due to a high percentage of companies with negative earnings, but it remains a solid core holding.
Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the Vanguard Russell 2000 ETF (VTWO), a passively managed exchange traded fund launched on 09/22/2010.
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Last November, Fundstrat analyst Tom Lee told CNBC that small-cap stocks are headed for a prolonged period of outperformance compared to the large-cap S&P 500 (^GSPC 2.13%). "I think small caps could, in the next couple of years, outperform by more than 100%," Lee said.
The benchmark S&P 500 index recently reached correction territory, indicated by a 10% drop from its highs. But certain other parts of the stock market have been hit even harder.
Fundstrat analyst Tom Lee in November told CNBC that small-cap stocks are positioned to crush the S&P 500 (^GSPC 0.72%) due to relatively cheap valuations and interest rate cuts. "I think small caps, in the next couple of years, could outperform by more than 100%," he predicted.
The Vanguard Russell 2000 ETF (VTWO) was launched on 09/22/2010, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.
The S&P 500 (^GSPC -0.29%) is the preferred gauge for the entire U.S. stock market because it includes 500 large-cap companies that cover 80% of domestic equities by market value. Meanwhile, the Russell 2000 is the preferred gauge for small-cap stocks.
A stock market correction is generally defined as a decline of 10% or more from recent highs. While the Dow Jones Industrial Average and S&P 500 aren't quite there yet, there's one major benchmark index that is: the small-cap Russell 2000.
When it comes to the major U.S. stock market indexes, the benchmark S&P 500 (^GSPC -0.43%) tends to get most of the attention. It's highly diversified, but its top eight holdings are the trillion-dollar giants that operate at the forefront of technological innovations such as artificial intelligence (AI), and they tend to generate the strongest revenue and earnings growth.
The stock market declined a bit after the recent Federal Reserve interest rate decision, but the reality is that the main benchmark indices, including the S&P 500 and Nasdaq, are still within a couple of percentage points of their all-time highs. However, the recent market turbulence has disproportionately affected small-cap stocks, and as a result, you might be surprised to learn that the Russell 2000 small-cap index is down by nearly 9% from its recent high, very close to the 10% threshold that is generally considered to be a correction.