For investors seeking momentum, Vanguard S&P Small-Cap 600 ETF VIOO is probably on radar now. The fund just hit a 52-week high and is up nearly 29.7% from its 52-week low price of $99.41/share.
But are more gains in store for this ETF? Let's take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
VIOO in Focus
This fund seeks to provide exposure to the small cap segment with key holdings in industrials, financials, consumer discretionary, information technology and health care. It is highly diversified across components with none holding more than 0.60% share and charges 15 bps in fees per year (see: all the Small Cap ETFs here ).
Why the Move?
The small cap space of the broad U.S. stock market has been an area to watch lately given the re-emergence of geopolitics and overvaluation concerns. In fact, the five biggest technology stocks, which were the main drivers of stock rally, lost more than $97.5 billion in market value on Friday as the leading investment bank Goldman Sachs warned that the stock price of these tech companies have raised rapidly. Additionally, the outcome of UK elections and growing tensions in the Gulf States are adding to volatility. Against such a backdrop, small cap stocks are the biggest beneficiaries as these are closely tied to the U.S. economy and do not have much exposure to the international market.
More Gains Ahead?
Currently, VIOO has a Zacks ETF Rank of 3 or 'Hold' rating with a Medium risk outlook. Therefore, it is hard to get a handle on its future returns one way or the other. However, many of the segments that make up this ETF have a strong Zacks Industry Rank. As a result, there is still some promise for investors who want to ride on this surging ETF.
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