iShares Russell 2000 ETF

IWM

Market cap $82.3B

Small caps have been having a banner year, with the Russell 2000 outperforming the S&P 500 year-to-date. Some small-cap focused ETFs have also surpassed that benchmark.

If you hold the iShares Russell 2000 ETF (NYSEARCA:IWM), you already know it as the default small-cap ticker on every financial channel.

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The iShares Russell 2000 ETF (IWM) holds nearly 2,000 small-cap stocks across different sectors. Small-cap stocks tend to be more volatile because they're more susceptible to broader economic conditions.

Tim Urbanowicz, Innovator head of research, joins 'Power Lunch' to discuss the state of small cap stocks, the impact of interest rates and much more.

The small-cap equities world carries a number of risks—unproven companies, higher volatility, and so on—but also brings the opportunity for growth that may outpace some larger names. International small-cap names may be heating up, and while small-cap stocks in the United States have already had a good run, many valuations remain comparably attractive when held up against mega-cap tech stocks and other top names.

The Russell 2000 has now lagged the broader market for many years. Small-cap stocks tend to perform well during periods of lower interest rates and economic expansion.

iShares Russell 2000 ETF targets small-cap growth and value stocks, while Invesco QQQ Trust, Series 1 focuses on the largest non-financial leaders on the Nasdaq. Invesco QQQ Trust, Series 1 carries a slightly lower expense ratio of 0.18% compared to 0.19% for iShares Russell 2000 ETF.