It has been a good year for small-caps and the major
that house them. The iShares Russell 2000 Index Fund (NYSE:
) is up 14.3 percent year-to-date while the Vanguard Small-Cap
) is higher by 15.6 percent.
Decent performances to be sure, but not spectacular when
considering the SPDR S&P 500 (NYSE:
) is up 14.9 percent
with noticeably less volatility
Increased volatility is usually part of the equation when
dealing with small-caps, even more so when evaluating global
small-cap equities and ETFs. However, those investors that are
willing to take a look at international stocks with smaller
market caps can find some rewarding options.
Better yet, let ETFs remove the stock-picking burden and
consider these international small-cap funds that offer more
upside for the rest of this year.
WisdomTree Europe SmallCap Dividend Fund (NYSE:
) There are a couple of things about this ETF that need to be
addressed right off the bat. Yes, DFE is a dividend ETF, but it
is not a great yield play as its 30-day SEC yield is just 1.93
percent. Second, it is fair to say most investors
know playing with some Europe ETFs
large-cap, small-cap or otherwise, can be kind of like playing
With the U.K. and Italy, two economies mired in deep
recessions, combining for over 39 percent of DFE's country
weight, one might wonder why this fund is worth a look. Germany,
Sweden and Norway combing for about 26 percent of the ETF's
weight helps. Additionally, most of the few remaining members of
the AAA sovereign credit rating club receive some allocation in
Bottom line with DFE: If Europe becomes a more sanguine place
to invest and investors embrace European cyclicals, this ETF will
benefit. DFE is up almost eight percent year-to-date. The ETF has
an annual expense ratio of 0.58 percent and $60.5 million in
SPDR S&P Small Cap Emerging Asia Pacific ETF (NYSE:
) If some issues regarding DFE needed to be addressed before
evaluating the upside of that ETF, then there are some warning
labels with the the SPDR S&P Small Cap Emerging Asia Pacific
ETF. GMFS is 16 months old and only has $2.29 million in assets
under management and folks do not get around to trading this ETF
everyday. In fact, it last traded on May 6.
We are not in the business of forecasting ETF closures, but it
should be noted that other ETFs that have focused on Southeast
Asian small-caps have closed. Those that are still around are
struggling. Investors love the region's large-caps and the
relevant ETFs, but have been slow to consider smaller stocks
Those disclaimers belie the potential offered by GMFS, which
has returned nearly seven percent year-to-date. At the country
level, this fund is not excessively risky with Taiwan and China
combining for 64 percent of the ETF's weight. However, GMFS does
offer decent exposure to some of the region's better-performing
markets with Indonesia, Malaysia, Thailand and the Philippines
combining for 24 percent of the ETF's weight.
GMFS has a couple of nifty surprises including a beta of just
0.17, a dividend yield of 3.48 percent and a lower P/E ratio than
the MSCI Emerging Markets Index,
according to State Street data
For more on ETFs, click
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