Thinking about buying into the small-cap trend? Here’s what to keep in mind

August 20, 2018

Thinking about buying into strong-performing small-cap funds?

This year’s small-cap trend was one of the topics that FundX Chief Investment Strategist Jason Browne covered on Reuters TV on August 3, 2018.

“Everyone’s talking about the S&P 500 getting back near its highs back in February, while small caps have been making new highs for some time,” Jason said.

Watch Jason’s Reuters interview here and get his small-cap tips below.

If you’re thinking about investing in small-caps, here are a few things to keep in mind:

1. Within the small-cap trend, “small-cap growth [as opposed to value style] in particular has been pretty strong,” Jason said. He pointed to iShares Small Cap S&P 600 Growth ETF (IJT) as one way investors can get exposure to this area.

2. Keep risk in mind. Small-cap funds aren’t for everyone. “Small caps are part of the more aggressive part of your portfolio,” Jason said.

3. Recognize that these funds could get hit if the market sells off. “When we have any kind of a pullback, usually whatever’s been doing the best tends to get hit hardest, and you saw that with small-caps and technology late July,” Jason said.

4. Remember that large-cap funds are still favor, and these funds tend to be less volatile than small-cap funds.

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