Jim Lebenthal, Chief Equity Strategist at Cerity Partners, joins CNBC's "Halftime Report" to explain why he's still bullish on these stocks.
Here, we highlight the reasons that are likely to drive the outperformance.
IJR offers diversification and controlled exposure to small-cap stocks, at a low expense ratio of 0.06%. Small-cap stocks can outperform due to faster growth potential and frequent undervaluation. Conflicting economic data also makes the case for equity exposure through such a fund.
If you're interested in broad exposure to the Small Cap Blend segment of the US equity market, look no further than the iShares Core S&P Small-Cap ETF (IJR), a passively managed exchange traded fund launched on 05/22/2000.
With the Federal Open Market Committee (FOMC) cutting interest rates by a larger-than-expected 50 basis points in its September meeting, businesses throughout the country will be able to take out loans more cheaply. One intended goal of a rate cut like this is to foster increased profitability through business expansion.
2 ETFs that offer big time growth potential
Large-Cap stocks have powered ahead to the point where small-caps now offer a higher dividend yield. The small-cap space is most commonly associated with the iShares Russell 2000 ETF. Declining borrowing rates should benefit small companies to an outsized degree, especially given their reliance on bank debt.
Launched on 05/22/2000, the iShares Core S&P Small-Cap ETF (IJR) is a passively managed exchange traded fund designed to provide a broad exposure to the Small Cap Blend segment of the US equity market.
In recent weeks, investors started pouring significant money into small-cap stocks. The move came after years during which the Street shunned the names because it believed they were not attractive in an era of high interest rates.
The iShares Core S&P Small-Cap ETF (IJR) was launched on 05/22/2000, and is a passively managed exchange traded fund designed to offer broad exposure to the Small Cap Blend segment of the US equity market.
Small cap stocks are struggling compared to large cap peers, with Apple Inc. worth more than the entire small cap market combined. Small cap ETFs are vulnerable in the stock market, with signs indicating they may lead the broader market down. The IJR small cap ETF is showing signs of weakness in technical charts, potentially indicating further downside risk.
As the three major bourses are hovering near record highs, investors are rotating to areas like utility and the small-caps, which are cheap and undervalued.