VTWO - Is the Vanguard Russell 2000 ETF the Best Undervalued ETF for You?
2024-06-30 06:08:00 ET
At the start of 2024, small cap stocks were trading for their lowest price-to-book valuations compared with their large-cap counterparts in a quarter century. And the gap has widened even further, especially as mega-cap tech stocks have continued to outperform.
In fact, while the S&P 500 is hovering around its all-time high, the Russell 2000 index is still about 18% below its 2021 peak. With that in mind, could a low-cost index fund like the Vanguard Russell 2000 ETF (NASDAQ: VTWO) a smart move right now?
I wrote an article at the beginning of 2024 about the valuation gap between small and large cap stocks. According to Fundstrat analyst Tom Lee, small caps were trading for the lowest overall price-to-book valuations relative to the S&P 500 since 1999. And the last time the gap was this wide, small cap stocks outperformed large caps for the next 12 years.
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Is the Vanguard Russell 2000 ETF the Best Undervalued ETF for You?