Better Buy: iShares Russell 2000 Growth ETF vs Schwab U.S. Small-Cap ETF | 28.02.21 | finanzen.at

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28.02.2021 15:50:00

Better Buy: iShares Russell 2000 Growth ETF vs Schwab U.S. Small-Cap ETF

Small-cap stocks outperformed large-cap stocks in 2020 and that trend is expected to continue in 2021, many analysts say, citing Biden administration policies that will help Main Street more than Wall Street, among other reasons. The Russell 2000, which is the major index tracking small-cap performance, was up 20% in 2020 while the S&P 500 rose 18.4%. The difference so far this year is more pronounced: Through the market close Friday, the Russell 2000 was up about 11.5% year to date while the S&P 500 was up roughly 1.5%. While market trends shift over time, small caps should be part of a diversified investment portfolio to capture gains when large caps are weaker. Finding the right individual small-cap stocks can be a challenge in part because of the more volatile nature of smaller companies, so exchange-traded funds (ETFs) can be a great solution. Two of the largest small-cap stocks funds are the iShares Russell 2000 Growth ETF (NYSEMKT: IWO) and the Schwab U.S. Small-Cap ETF (NYSEMKT: SCHA). Which one is the better buy? The iShares Russell 2000 Growth ETF is the fourth-largest small-cap ETF, holding about $12.9 billion in assets. It tracks the Russell 2000 Growth Index, which includes about 1,100 stocks with higher price-to-value ratios and higher levels of forecast growth. It has a median price-to-earnings ratio of 36.5 and a median price-to-book ratio of 6.2, with a standard deviation, which is a measure of volatility, of 48.5%.Continue reading
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