Best Small Cap Funds

Small cap stocks tend to outperform the broad market over the long term. However, during crisis periods and recessions, they also tend to crash more. What makes small caps attractive right now is that they have a low valuation relative to the rest of the US market. So in this video, I discuss the differences between small cap indices and also show you the cheapest UK and US funds that track them. I also examine how small cap funds have outperformed in the past and explain what risks you need to look out for.

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Timestamps
00:00 Introduction
00:38 Market Capitalization
01:19 Small Caps
02:45 Outperformance
04:12 Small Cap Indices
06:38 Why Now?
09:05 Risks
11:03 Funds

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DISCLAIMER
All information is given for educational purposes and is not financial advice. Ramin does not provide recommendations and is not responsible for investment actions taken by viewers. Figures that are quoted refer to the past and past performance is not a reliable indicator of future results.

[pistopit]

Thanks for picking up on this subject Ramin. Would be great to see more material in a future on factor investing.

[A_man_not_your_man]

Much appreciated and very informative! I've been happy with my Avantis SCV ETF but always good to know about other options

[mattlm]

The SPDR small cap value funds USSC and ZPRX are worth a look. Not much choice for UCITS funds unfortunately.

[terrysav]

Very good video.. I have some CT threadneedle US small cap which has done well except for recently because of the bank crises

[simonwl]

Thanks for that Ramin. I'd be interested to see you break down emerging markets in a similar way and whether you feel a passive tracker fund or active fund is better to just hold EMs in a multi asset fund. decisions decisions eh?

[DanielMatan]

thanks for the great analysis! I'm wondering what do you have to say about midcaps? they seem to have similar valuations and little better performance over the long run but also seem less volatile than small caps. i wonder what could be the reason for that

[MagicNash]

AH! Ramin here when you need him, such a coincidence I was just looking for a small cap ETF

[dannyrunny]

another GREAT analysis. Thank you for your hard work!

[simonjonesptchester]

Excellent information and analysis as always; thanks, Ramin!

[crassusofrome]

Hi Ramin,

Thank you for the great content as ever. Given UK valuations are lower than the US, and given the relatively overvalued USD relative to GBP, is it likely a better long term bet to invest in UK small caps rather than US small caps at the moment?

[nick_]

Thanks for the great video. Do you have any particular preference between ETFs vs index funds?

[federicoytbe]

L&G Russell 2000 US Small Cap UCITS ETF currently tracks Russell 2000 Quality Factor Index. It has some quality tilt which makes it unique among Russell 2000 UCITS funds.

[apothe]

The best Small Cap ETF is AVUV or AVDV, by far

[michelpohl]

Do you know what the ratio between small caps and all caps in all cap global indices such as the FTSE global All Cap or MSCI AWCI IMI is? I am trying to combine the iShares MSCI World Small Cap ETF and the iShares MSCI ACWI in my InvestEngine ISA (there is no all cap ETF there at the moment). I set the weightings to 0.12% and 0.88% because I read somewhere that "global equities account for approximately $70 trillion in assets, with almost 12% covered by the developed small-cap segment" (but that was an old article).

[fredatlas]

What Vanguard global small cap fund, for UK investors

[pickafund]

Great video Ramin. We are new to your channel.
Is there any particular region which you feel offers better small cap value?
UK, Europe, Japan?
We keep reading that UK value stocks are the trade of the decade…?

[ciaoatutti]

Any update on your momentum based portfoilio?

[agsmith]

great topic! RYLD is a russell 2000 covered call fund. ive been adding to this recently thinking things will be choppy but still want small cap exposure

[thomasmcneilly]

Hi Ramin, I'm just wondering how something like the MSCI World Small Cap Index (e.g. ticker WLDS) stacks up against Russell 2000 or S&P 600 - is it also under valued? Thanks

[__Rum-Ham__]

Thanks Ramin. What percentage of a global ETF portfolio would you suggest allocating to a small cap ETF? Many thanks.