What Is the Best Small-Cap ETF to Buy?
Small-cap stocks are often the first to sell off ahead of turbulent economic conditions. Indeed, this is the exact scenario that played out in late 2021 when the Federal Reserve first began talking about hiking interest rates. Scores of high-risk, developmental-stage companies saw their share prices plummet in a matter of weeks, followed by a nearly two-year period of stagnation as the Fed kept hiking rates to battle inflation. With the Federal Reserve likely to start cutting rates in 2024, however, small-cap stocks should begin to rally in the coming weeks.
While picking individual stocks can lead to outsize gains, it is also an inherently risky strategy, especially in the small-cap landscape. Instead, many investors lean on exchange-traded funds (ETFs) to capture the upside potential in small-cap stocks during bullish periods. This strategy comes with the added benefit of diversification, which helps to lower a portfolio's exposure to risk. However, there are dozens of small-cap ETFs to choose from. Which one is the best buy?
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Source Fool.com
