Small-Cap stocks have been some of the market's strongest recent performers, with year-to-date returns for the Russell 2000 Index up approximately 20%.
Small-cap value has been one of the loudest asset classes in the market over the past year, and the tax bill on that ride depends entirely on which account holds it.
The small-cap equities world carries a number of risks—unproven companies, higher volatility, and so on—but also brings the opportunity for growth that may outpace some larger names. International small-cap names may be heating up, and while small-cap stocks in the United States have already had a good run, many valuations remain comparably attractive when held up against mega-cap tech stocks and other top names.
Small-cap value is one of the most persistent factor bets in equity research, but the two most popular ways to own it look almost nothing alike under the hood.
The Avantis U.S. Small Cap Value ETF (NYSEARCA:AVUV) is having the kind of year that small-cap value advocates have been promising since 2021.
I am a long time investor and student of business, and believe finding good companies that can become great investments is the best game on earth.
Small-cap value has done something in 2026 that few investors positioned for: it pulled meaningfully ahead of the growth complex that defined the prior decade.
Nomura joins Wall Street firms expecting no Fed rate cuts in 2026. These value, bank and cash-flow ETFs could benefit.
Avantis U.S. Small Cap Value ETF (AVUV) offers diversified exposure to U.S. small-cap value equities at a relatively moderate ~0.25% expense ratio. The valuation spread and gap between growth and value stocks remains near historically highly elevated levels, increasing the relative appeal of value-oriented allocations. AVUV's proposition is primarily factor-driven rather than security-selection driven, given its highly diversified portfolio structure with over 700 holdings.
The Avantis U.S. Small Cap Value ETF (NYSEARCA:AVUV | AVUV Price Prediction) is the actively managed option on this list, and that distinction matters more than the label suggests.
U.S. Small Cap Value trades near historical averages, while Large Cap Growth trades at more than 2x its long-term relative valuation. The price-to-book spread between growth and value is near historical extremes, a setup that has historically favored SCV outperformance. Institutional capital market assumptions continue to show higher expected real returns for small caps relative to large caps.
Avantis US Small Cap Value ETF offers diversified exposure to U.S. small-cap value stocks, targeting firms with strong fundamentals and low valuations. AVUV has delivered a 14.9% average annual return since inception, with a low 0.25% expense ratio and over $22B in assets as of February 2026. Small-cap value stocks are positioned for potential outperformance in 2026 due to lower interest rates, earnings growth, and rotation out of large-cap tech.