This exchange-traded fund owns fast-growing small-company stocks with strong price momentum. By Nellie S. Huang, Senior Associate Editor October 5, 2012 With all the attention given to large-company stocks lately, it’s easy to overlook the oomph that their smaller siblings can provide. Consider this: Since 1926, small-capitalization stocks have outpaced their larger brethren by an average of two percentage points per year. That’s not surprising—after all, the smaller a company is, the more room it has to grow. Over the past ten years, Standard & Poor’s 500-stock index, a measure of large companies, returned 7.0% annualized, but small caps gained 9.4% per year. SEE ALSO: Our Special Report on ETFsInvestors looking for exposure to small, fast-growing companies should consider Guggenheim S&P Smallcap 600 Pure Growth (symbol RZG). The ETF tracks an index that uses a proprietary S&P ranking system to home in on firms with a three-year history of above-average earnings and sales growth, as well as above-average share-price momentum. (The theory of momentum investing is that things in motion, including stock prices, tend to stay in motion.) The Pure Growth index focuses more sharply on growth than the S&P Smallcap 600 Growth index, which itself contains fast-growing small caps. Pure Growth weights firms using the S&P ranking system—the higher a firm’s growth score, the bigger its weight in the index. But it’s the index’s momentum filter that has lately given Guggenheim an edge over its ETF peers. Over the past year, the Guggenheim ETF beat the typical small-cap growth ETF by 4.6 percentage points. Kiplinger's Investing for Income will help you maximize your cash yield under any economic conditions. Subscribe now!