iShares Core S&P Small-Cap ETF $IJR
This an interesting blog post about Small Cap strength Vs Large Caps in a rising interest rate environment. (Link at bottom)

I've been looking to utilise ETFs in my Investment Portfolios.

TL;DR

Cheap valuation compared to SP500

  • SP600 Small Cap: 12-month forward earnings of 12.6x Vs Long-term average of 17.1x

  • Discount of 23% against SP500 current 12 month valuation of 16.4X

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Less sensitive to rising interest rates

  • Small caps historically outperformed large caps when rates rise. Held true during this cycle.

  • 31% gain for small caps Vs 13% for Large Caps

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Less sensitive to dollar strength

  • $ Strength hits large caps as they derive 40% of sales from overseas Vs 21% for Small Caps

How to play

Excerpt from the blog;

  • The S&P 600 index is a higher-quality slice of the small-cap universe because it requires its constituents to be profitable. 30% of Russell 2000 constituents lose money. That makes IJR a better choice if we hit a recession and/or rates keep climbing. Money-losing companies rely heavily on debt to stay afloat, leaving them vulnerable as the economy cools or the cost of capital rises.

Joey Hirendernath's avatar
This is valuable insight. I wish my brokerage would give me access to the two leading small cap ETFs, at the moment the one I use is very basic. This is definitely something I want to look into.
Joey Hirendernath's avatar
@buyingyourtime I have an ISA with trading 212. It essentially is a “commission free brokerage” in the UK aimed at more beginner investors.
Buyingyourtime's avatar
@joeyhirendernath I was with Hargreaves Lansdowne for many years. I still have my SIPP there and some family accounts.

The platform and customer service is excellent but you pay a little higher on fee's. But with that you have access to so many funds, ETF's and stocks. I believe UK's largest for funds.

If you want to add a bit more sophistication and perks like being able to trade after and before hours then Interactive Brokers is great. I recently moved all my assets to them. I still have my SIPP and some family accounts with Hargreaves

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