By strategy
Small-cap ETFs
Small-cap ETFs bundle lots of smaller companies into a single fund, so you can own a slice of them without choosing individual shares yourself.
What Small-cap ETFs are
A small-cap ETF holds shares in hundreds or even thousands of smaller companies. 'Small-cap' just means a company with a relatively low total market value (its share price multiplied by the number of shares). So instead of buying one small business, you own a tiny piece of many at once.
Over some long periods, smaller companies as a group have historically returned more than large ones, which is one reason some investors add a small-cap slice. That extra return has come with extra risk, though: smaller companies can be more fragile, and their share prices tend to swing more sharply, especially when markets fall. Past patterns are not a promise about the future.
Because of this, a small-cap ETF is usually treated as a small 'satellite' — a side holding next to a broad, worldwide fund — rather than a first building block. Many broad world ETFs already include some smaller companies, so a dedicated small-cap fund is an optional extra, not a starting point.
At a glance
Why beginners look here
A different slice of the market
Small-cap funds hold companies a large-cap fund often skips. Over some long periods this group has returned more than large firms — but not in every period, and past patterns aren't a promise.
Higher swings, higher risk
Smaller companies can be more fragile, and their share prices often move more sharply — up and down — than large, well-established firms.
Many names, one fund
Owning hundreds of small companies at once spreads out the risk of any single one struggling.
What to look for
Popular Small-cap ETFs
A few of the largest, pulled live from the screener — an example, not a recommendation.
Schwab U.S. Small-Cap ETF
State Street® SPDR® Portfolio S&P 600™ Small Cap ETF
iShares MSCI World Small Cap UCITS ETF
State Street® SPDR® Russell 2000 U.S. Small Cap EUR Hdg UCITS ETF (Acc)
State Street® SPDR® Russell 2000 U.S. Small Cap UCITS ETF (Acc)
Schwab International Small-Cap Equity ETF
Good to know
Is a small-cap ETF too risky for a beginner?
It carries more risk than a broad world fund, so it's often treated as a small extra rather than a first or only holding. How much risk suits you is a personal decision.
Do I need one if I already own a world ETF?
Not necessarily. Most broad world ETFs already include some smaller companies, so a separate small-cap fund just tilts your mix further toward them.
Why do small-cap prices swing so much?
Smaller companies are often younger and more sensitive to the wider economy, so their share prices can rise and fall more sharply than large, well-known firms.
Related topics
Finance Hamster provides educational information about ETFs and investing. It is not investment, tax, or legal advice, and not a recommendation to buy or sell any security. Markets carry risk; do your own research or consult a licensed adviser.