Looking at Small-Cap ETFs? The Time For Caution Is Now

Looking at Small-Cap ETFs? The Time For Caution Is Now

If you want to look at how powerful the snap-back has been since the November-December meltdown, just take a look at small-cap ETFs like iShares Russell 2000 ETF (IWM B+). Small-caps have been on fire in the new year and have been one of the best performing market segments year-to-date. As investors have once again brushed off concerns about the global economy, small-cap stocks both here and abroad have rallied hard.

Perhaps too hard.

With few catalysts left to propel them forward, high valuations, and still plenty of uncertainty in in the world, small-caps and the ETFs that track them may not have much “oomph” left in the tank. For investors, this is one rally they may not want to chase at full steam. The time for caution in small-cap ETFs could be now.

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