New Trade for September 21st, 2020

Red futures across all major U.S. indices are pointing to a continuation of last week’s losses.  The Nasdaq is beginning the week in correction territory, meaning a more than 10% down from it’s Sept. 2nd high.  The blue-chip-tech sell-off is set to continue.  This morning many factors are weighing heavy on the markets.  

Not all stocks are lower today.  In fact, if you held our Friday trade over the weekend, you’re stacking on gains this morning.  PIC is already up 6% in pre-market trading as investors anticipate the merger between XL Fleet and Pivotal Investment Corp.  

In light of the mega-cap pull-back, many investors are shifting their focus to small cap stocks which haven’t fared as well in their recovery and therefore have plenty of room for gains in the second half of 2020.  

Because of their size, small-cap stocks have strong, albeit volatile, growth potential.  If you’re interested in adding small-cap stocks to your portfolio as 2020 draws to a close, consider an ETF.  An investment in a small-cap ETF can reduce the volatility associated with individual stocks while adding an important layer of diversification to your portfolio. 

One of our favorite small-cap ETFs is Vanguard Small-Cap Growth ETF (VBK).

The VBK fund leans toward the companies that aspire to become the next generation of stock market leaders.  Investors who buy VBK can potentially get in on the ground floor of the next industry leader.  For instance, ETSY is a VBK holding which recently joined the S&P 500.  Some key stats for VBK (notice the low, 0.07% expense ratio):   

  • Net Assets 25.8B
  • NAV 203.18
  • PE Ratio (TTM) N/A
  • Yeild 0.52%
  • YTD Daily Total 2.48%
  • Beta (5Y Monthly) 1.25
  • Expense Ratio (net) 0.07%
  • Inception Date 2004-01-26
  • Current Top Holdings: Docusign (DOCU), Moderna (MRNA), West Pharmaceutical Services Inc. (WST)