9 Small-Cap ETFs to Buy Now

Small-cap ETFs are long-term outperformers – and should be on every investors' radar.

group of small fish shaped like a big fish chasing a shark
(Image credit: Getty Images)

Exchange-traded funds (ETF) continue to gain in popularity among both individual and institutional investors alike, with ETF trading activity in 2022 hitting a record. Overall, the U.S. equity ETF market hit $5 trillion last year. However, just a fraction of those several trillion dollars were put into small-cap ETFs. 

That's unfortunate because exchange-traded funds are the perfect way to capture the potential of the small-cap stocks while diversifying your portfolio beyond large-cap stocks.

Small-cap stocks, like the broader global market, had a rough 2022, with the Russell 2000 Index ending the year down 21.6% through the year's first half. In addition to geopolitical concerns, investors were worried that the Federal Reserve's rate-hiking would slow the U.S. economy and put a dent in their future earnings.

However, small caps have turned course in 2023, and are up 9.5% for the year-to-date, outpacing the S&P 500 Index by more than 4 percentage points. And small-cap stocks have put in a solid outperformance over the long term too. Over the past 10 years, smaller capitalization stocks were the second-best performing asset, up 10.8% annually, trailing only large caps. This is a good sign for small-cap funds.

That said, here are 9 small-cap ETFs that should be on your radar. If you want to build a well-constructed portfolio, it would be wise to consider a fund that invests in U.S. small-cap stocks, as well as one that holds foreign small-caps.

Data is as of March 3. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds. 

Will Ashworth
Contributing Writer, Kiplinger.com

Will has written professionally for investment and finance publications in both the U.S. and Canada since 2004. A native of Toronto, Canada, his sole objective is to help people become better and more informed investors. Fascinated by how companies make money, he's a keen student of business history. Married and now living in Halifax, Nova Scotia, he's also got an interest in equity and debt crowdfunding.