Micro Cap ETFs

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Average returns in this Category	3 months return	6 months return	12 months return	YTD return

Micro Cap ETFs	15.26%	29.13%	-35.21%	-0.99%

Ticker SPY	Name	3 months return	6 months return	12 months return	YTD return

FDM	First Trust Dow Jones Select MicroCap ETF	16.33%	55.94%	-19.74%	12.26%

PFP	International Listed Private Equity Portfolio ETF	12.9%	-89.23%	-96.02%	-92.41%

IWC	iShares Russell Microcap TM	17.22%	59.97%	-14.16%	21.19%

IPRV	iShares S&P Listed Private Equity ETF	17.76%	6%	-24.08%	6%

PWO	Powershares Dynamic OTC Portfolio ETF	14.06%	33.82%	-16.12%	13.51%

PSP	Powershares Listed Private Equity Portfolio ETF	19.52%	92.72%	-47.64%	25.52%

PZI	Powershares Zacks Micro Cap Portfolio ETF	9%	44.72%	-28.68%	7.02%


	About Micro Cap ETFs
Micro Cap ETFs Overview and forecast Micro capital corporations are by definition exactly what they sound like. Their level of capitalization is low. That comes with some sweeteners. Because the capitalization is low, the level of equity is high. Meaning returns can be very good, and asset values can be high. Although the Micro Cap ETFs took as big a hit as the giants during the crash, it's arguable they weren't really properly valued. Micro Caps aren't immune to the laws of finance or physics, but they're also relatively lower exposed, in terms of capital commitments. The market seems to have reinstated their faith in the Micro Cap ETFs, pretty much reversing their negative returns in the first half of 2009. That's not unreasonable, because the Micro Cap ETFs are also practitioners of the ETF model, just on the micro scale. Their holdings are just as broad based, index- oriented, and as conservative in terms of weighting as any major league ETF. Short term (6 months) The Micro Cap ETFs aren't particularly fashionable, but they can achieve a good performance in their lower price ranges to the point they're credible short term traders. That said, some of the Micro Cap ETFs haven't necessarily been attracting trading volumes. Some are very popular, others are static. They've climbed back up from the bottom of the crash with roughly equal sharpness, but the trading patterns are quite mixed. Short term isn't necessarily the Micro Cap ETFs best side. The short term recovery, based on the first six months of 2009, isn't very convincing as being much more than following the market. The good traders can be expected to give good margins, and are quite mobile. The bad traders can be expected to continue to do very little, and still give margins which could get on people's nerves, if they go down, not up. Medium term (2 years) The Micro Cap ETFs have the same problem as many other ETFs which started around 2006- 7 when the bull market was at its height. That medium term was hardly normal. It needs to be said that the Micro Cap ETFs have something to prove, like all the ETFs of that period, in how they're going to deal with the new investment environment. There's not a lot of reason to believe that all of the Micro Cap ETFs will pass that test. Some will have redesign themselves, because they're not particularly competitive investments, by the most charitable assessment. There are better things on offer, and investors, despite rumors, aren't charities. Expect some necessary- standard rethinks in the Micro Cap ETFs. Long term (5 years) In the long term, the Micro Cap ETFs are interesting, because they're unique. They're not part of the main index routine. Their holdings are different, and do represent a definite spread across a range of otherwise difficult investments including actual up and comers. The Micro Cap ETFs haven't had the time or the investment climate to prove their credentials as good money makers. The oldest Micro Cap ETFs followed the standard pre crash ETF behavior, rising well, on a slow curve, but were somewhat more effective as money makers than other ETFs. They all dropped like rocks during the crash, but managed sharper recoveries. That may be a better guide to their real nature. The long term for the Micro Cap ETFs could be excellent, if they retain market interest as traders. Qualifiers to projections The Micro Cap ETFs have one thing very much in their favor: They're very interesting things as holdings. They're extremely diverse. You can even invest in Private Equity Micro Cap ETFs. These are the sort of corporations where investors may be fascinated, but not too crazy about direct investment. Another point is that when some of the Micro Cap ETFs went down, some went a long way down. They didn't respond well to the market's big moves. The risk factor is proven. Nor is diversity much of a defence. The best performance by one of the Micro Cap ETFs was a drop of about 33% during the crash. As the Micro Cap ETFs evolve, their class of fund, as well as their individual natures, will be prone to more individual and subjective forces. Their many differences will become a lot more important. Investors will need to take some considered choices when picking their Micro Cap ETFs, because as they diversify, they'll be less of a sector- like investment.

Last Updated on: 2010-01-14 02:03:40

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