Small-cap stocks have delivered huge gains recently.
The Russell 2000 index, the most widely used benchmark for small-cap stocks, has trounced its 2007 record highs, rising 24% over the past 12 months. While there is some chatter that the rally in small-cap stocks may have hit a wall, experts say they still deserve a spot in long-term portfolios.
"During times of economic growth, small cap stocks tend to outperform their larger counterparts," said Tom Lydon, president of Global Trends Investments and editor of ETF Trends.
The iShares Russell 2000 Growth Index Fund ETF focuses on companies whose earnings are expected to grow at an above-average rate relative to the market. Top holdings include tech companies such as TIBCO Software (TIBX) and Rackspace Hostings (RAX), as well as Decker Outdoors (DECK), the shoemaker behind Teva sandals and UGG boots.
Experts also like the S&P small-cap 600 Value ETF (IJS), which has risen nearly 11% over the past year, and the S&P small-cap 500 Growth ETF (IJT), which has soared nearly 30%.
Young people are all about keeping up with the latest trends, even when it comes to their investing strategies.
