Trading action was muted this morning as stocks looked for a direction to head for the final session in September and the third quarter. Analysts remain positive heading into October as investors search for bargains among battered stocks, but some analysts predict a shift into equities with smaller market values moving into the final months of the year as hyper-extended large-caps could continue to lose steam.
Some of the most successful names of our time began as speculative small-caps. Amazon was a $7 stock in 1998, and Tesla had a market valuation of just $1 billion in 2010. Of course, not every small-cap company becomes a giant. The truth is, some of today’s burgeoning small-cap names could cease to exist down the line.
In today’s stock pick, we’ll discuss a popular small-cap fund that allows investors to get in on the ground floor of potential future industry leaders.
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Investing in small caps can be highly rewarding but also comes with risks that need to be considered. If you’re interested in adding small-caps to your portfolio but want to cut back on the risk, investing in ETFs can reduce the volatility associated with individual companies while adding an essential layer of diversification to your portfolio because they provide exposure to a variety of stocks.
The Vanguard Small-Cap Growth ETF (VBK) fund leans toward the companies that aspire to become the next generation of stock market leaders. Investors who buy VBK can potentially get in on the ground floor of the next industry leader.
The investment thesis behind small caps is that these firms are likely to provide strong growth prospects to a portfolio and should have a much easier time growing than their large-cap counterparts. However, these securities are highly volatile and can experience significant losses or gains in a very short period of time. Despite their uncertainty, these stocks add a vital aspect to a well-rounded portfolio. They tend to move somewhat independently of large caps and can be a better pure play on the American economy.
VBK does an excellent job of dividing up assets as the fund holds more than 600 securities in total and doesn’t give anyone security more than 0.6% of the total assets. Thanks to this high level of diversification aandVBK’ssultra-low expense ratio, the fund could make for a superb addition to portfolios of investors looking for small caps but seeking a higher risk/reward profile in the space.
Vanguard Small-Cap Growth ETF (VBK) Data Summary
- Weighted Average Market Cap $8.03B
- Price / Earnings Ratio 205
- Price / Book Ratio 5.60
- YTD Daily Total Return 6.04%
- Yield 0.45%
- Expense Ratio 0.07%
- Net Assets $37.89B
- Number of Holdings 677
Where to invest $1,000 right now...
Before you consider buying VBK, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not VBK.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
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