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This Small-Cap ETF Could Offer Investors Some Great Growth Potential
Investing in exchange-traded funds (ETFs) is a great way to not only minimize risk but to give you exposure to stocks you may not have known about or considered buying. One way for investors to potentially balance stability with growth is by focusing on small-cap stocks, where the upside could be significant.
The Invesco S&P SmallCap Consumer Discretionary ETF (NASDAQ:PSCD) makes for an intriguing option for investors because it focuses on consumer discretionary stocks and gives exposure to some lesser-known companies. There are 81 holdings in the fund, with the top three stocks being Georgia-based automotive retailer Asbury Automotive Group (NYSE:ABG), home builder Meritage Homes (NYSE:MTH), and retailer Academy Sports & Outdoors (NASDAQ:ASO), with each one accounting for over 3% of the ETF's total weight.
Specialty retail stocks account for one-third of the fund's holdings, followed by household durables at 22%, hotels and restaurants at 16%, automobile components at 12%, and other segments accounting for smaller portions.
The ETF has an expense ratio of 0.30% which is modest and means that on a $10,000 investment, it would only cost you just $30 in fees. With a focus on small-cap stocks, there's much more volatility in the fund and its beta of 1.2 does suggest that.
Year to date, it has done well, generating total returns (which include dividends) of 14%. And over the past five years, its total returns come in at 40%. There's a bit more risk with the stock but it could be a good place to invest in as economic conditions improve and consumer spending picks up.
