U.S. Small-Cap Value Equity

U.S. small-cap value mutual funds and ETFs invest in small-cap stocks deemed... U.S. small-cap value mutual funds and ETFs invest in small-cap stocks deemed to be undervalued on a fundamental basis. Value investing is the opposite of growth investing, which seeks to own companies that may exhibit faster growth than the market average. Value investing can also be beneficial if a company pays out healthy dividend yields, which can increase an investor’s total return. Depending on the mandate, the fund or ETF can invest in companies deemed to be undervalued based on current factors such as book value, earnings per share, revenue, or free cash flow. Value stocks tend to trade at lower valuations (price-earnings ratios, for example), than growth stocks. A defining feature of small-cap stocks is that they usually have a market capitalization under US$1 billion. Some U.S. small-cap value mutual funds and ETFs invest solely in smaller companies, although some portfolios invest in stocks of all sizes, but retain a small-cap profile for the overall fund. On one hand, value companies can be good investments if they continue to exhibit solid financial performance, or turn around struggling parts of their business. On the other hand, a value stock that loses market share or bleeds cash may significantly decline in price. Funds focused on U.S. small-cap value companies typically have a large concentration in the basic materials , financial services, and consumer sectors. U.S. small-cap value mutual funds and ETFs are usually appropriate for more aggressive investors who aim to generate high returns and are comfortable with high levels of volatility. It should be also noted that small-cap value stocks do tend to exhibit more volatility than mid and large-cap value stocks. Last Updated: 01/22/2025 View more View less

U.S. small-cap value mutual funds and ETFs invest in small-cap stocks deemed to be undervalued on a fundamental basis. Value investing is the opposite of growth investing, which seeks to own companies that... U.S. small-cap value mutual funds and ETFs invest in small-cap stocks deemed to be undervalued on a fundamental basis. Value investing is the opposite of growth investing, which seeks to own companies that may exhibit faster growth than the market average. Value investing can also be beneficial if a company pays out healthy dividend yields, which can increase an investor’s total return. Depending on the mandate, the fund or ETF can invest in companies deemed to be undervalued based on current factors such as book value, earnings per share, revenue, or free cash flow. Value stocks tend to trade at lower valuations (price-earnings ratios, for example), than growth stocks. A defining feature of small-cap stocks is that they usually have a market capitalization under US$1 billion. Some U.S. small-cap value mutual funds and ETFs invest solely in smaller companies, although some portfolios invest in stocks of all sizes, but retain a small-cap profile for the overall fund. On one hand, value companies can be good investments if they continue to exhibit solid financial performance, or turn around struggling parts of their business. On the other hand, a value stock that loses market share or bleeds cash may significantly decline in price. Funds focused on U.S. small-cap value companies typically have a large concentration in the basic materials , financial services, and consumer sectors. U.S. small-cap value mutual funds and ETFs are usually appropriate for more aggressive investors who aim to generate high returns and are comfortable with high levels of volatility. It should be also noted that small-cap value stocks do tend to exhibit more volatility than mid and large-cap value stocks. Last Updated: 01/22/2025 View more View less