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Small-Cap Fund Shows Big Results


Although success has been difficult to find in the market for the first half of 2015, some exchange-traded funds (ETFs) have eked out impressive gains. Following the last ETF Talk about the #1 U.S. equity performer in that time frame, this week will highlight the silver medalist: the Guggenheim S&P SmallCap 600 Pure Growth ETF (RZG).

This fund tracks a subset of the S&P SmallCap 600 index. It chooses its holdings based on sales growth, earnings increases and, like the most successful fund of the half, momentum.

The small-cap stocks chosen by this method have been performing admirably so far this year. In the first half of the year, RZG increased in value by 11.43%. The fund also provides a small 0.61% yield to go along with its 0.35% expense ratio. Assets managed for this fund come in at about $196 million.

The chart below shows the performance that earned the fund a place in this column. Since tracking began in January, it achieved its stellar results simply due to superior growth, not a well-timed dip.

RZG’s holdings are most concentrated in the healthcare, financial services and consumer discretionary sectors. Its top 10 holdings account for 16.52% of its managed money.

Some favorite holdings include Lannett Co. (LCI), 2.26%; Taser International Inc. (TASR), 1.96%; Gentherm, Inc. (THRM), 1.75%; Take-Two Interactive Software (TTWO), 1.71%; and Repligen Corp. (RGEN), 1.55%.

If this impressive performance and strategy pique your trader’s senses, investing in Guggenheim S&P SmallCap 600 Pure Growth ETF (RZG) may pay off for you.

Watch for my description of the third-ranked U.S. equity fund for the first six months of 2015 in my next column.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

In case you missed it, I encourage you to read my e-letter column from last week on Eagle Daily Investor about the best-performing ETF of 2015’s first half. I also invite you to comment in the space provided below my Eagle Daily Investor commentary.