VTI vs. IWM: Which Broad Index ETF Is the Better Buy?
Should you go all-in on small-cap stocks, or diversify? This Vanguard ETF could be the best choice.
Overview
A hot topic of debate among investors right now is whether small-cap stocks belong in your portfolio -- and if so, how much. For most of the past few years, the U.S. stock market's largest companies, especially the tech powerhouses, have delivered the biggest returns, while smaller companies have lagged. But that might be changing.
The iShares Russell 2000 ETF (NYSEMKT: IWM) is a broad index ETF of more than 2,000 small-cap stocks that has outperformed the S&P 500 (SNPINDEX: ^GSPC) of large caps over the past year and year to date. Smaller companies have recently shown strong earnings growth and might be undervalued compared to the big-name stocks.
Details
But if you want to own small-cap stocks, you don't have to choose between large companies' and small companies' stocks. The Vanguard Total Stock Market ETF (NYSEMKT: VTI) lets you own nearly 3,500 stocks, representing the full range of the U.S. stock market -- including large-cap, mid-cap, and small-cap stocks.
Source
Originally published at www.fool.com.