Microcaps Continue to Pace the Market as Q2 Draws to a Close

As the second quarter draws to a close, we continue to see microcap shares pace a broader market that paused for breath in June. Smaller stocks, as tracked by the iShares Russell Microcap ETF
(NYSE: IWC), posted a 5.4% gain for June and a 3.8% gain for the second quarter. The Microcap end of the spectrum has led the market for the past year, with large caps riding a 6-month rally that has plateaued as the days have gotten longer.

It can be instructive to examine the industry exposure of the different market cap segment ETFs. For example, nearly half of the Microcap ETF is exposed to the
financial and health care sectors, while the greatest exposure in the large cap iShares Russell 1000 ETF
(NYSE: IWB) is in technology stocks. Even a casual market observer will have experienced how those sectors have performed recently and won’t be surprised by the absolute performance of the different ETFs. As you’re analyzing your portfolios, it will be helpful to consider these industry concentrations in conjunction with the market capitalization ranges of your individual exposures.

iShares Russell Microcap ETF Industry Exposure

iShares Russell 1000 ETF Industry Exposure

Source: iShares by BlackRock

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