SPSM ETF

I suggest investing in the SPDR® Portfolio S&P 600™ Small Cap ETF because Trump's tax cuts are likely to help small-cap companies. Historically, stocks tend to increase in value from November until the presidential inauguration, which makes it a good time to invest despite high market prices. Small-cap companies are expected to gain the most from Trump's policies and are currently priced lower than their average P/E over the past ten years.

I maintain a buy rating on SPSM due to its attractive valuation, solid diversification, and bullish technical indicators, despite some historical underperformance post-Fed rate cuts. SPSM offers low-cost, comprehensive exposure to small-cap US equities with a low 0.03% expense ratio and a compelling PEG ratio under 1.5. The ETF's sector allocation provides diversification benefits, with significant weights in Financials, Industrials, and Real Estate, and less exposure to Information Technology.

Small-cap stocks are trading at a massive valuation discount relative to the S&P 500. Falling interest rates could be the catalyst that leads to significant outperformance.

The current bull market has favored the biggest companies in the world, while small companies are left behind. Investors started a historically strong rotation into small-cap stocks in July.

July saw minimal growth for the S&P 500, but smaller companies saw their share prices soar. The shift to small caps may be just getting started as the money supply grows and the valuation gap remains high.

Small, mid, value, yield: is "the rotation" taking hold?

SPSM underperformed mid-cap and large-cap peers in the past 2 years. Earnings growth expected to improve significantly in 2025 and 2026. SPSM's forward P/E ratio is attractive, but may still lag behind the S&P 500 index in the long run.

VettaFi's Head of Research Todd Rosenbluth discussed the SPDR Portfolio S&P 600 Small Cap ETF (SPSM) on this week's “ETF of the Week” podcast with Chuck Jaffe of “Money Life.” The pair talked about several topics regarding the fund to give investors a deeper understanding of the ETF overall.

Looking for broad exposure to the Small Cap Blend segment of the US equity market? You should consider the SPDR Portfolio S&P 600 Small Cap ETF (SPSM), a passively managed exchange traded fund launched on 07/08/2013.