IWM - It's Selling Season For The Russell 2000 And ETFs That Track It
2024-03-27 12:38:38 ET
Summary
- The Russell 2000 index is flawed and historically has had negative alpha, making it a poor investment choice.
- The index incurs significant transaction costs during its annual rebalancing in June, further dragging down performance.
- May to August has historically been a period of underperformance for the Russell 2000, making it a good time to exit the index.
“Sell in May and Go Away” is an old saying that is particularly applicable to the Russell 2000. Every asset class has its day in the sun, and one could easily construct a bull thesis for small caps. However, the Russell 2000 is a flawed index, selling season is here, and it’s time to exit both this index and the ETFs that track it. History shows that if you haven’t done so already, you should sell it in the next month and put your money elsewhere. This isn't a view on small caps, it's a view on the index. If you believe that small caps will outperform, find a different way to express this view....
It's Selling Season For The Russell 2000 And ETFs That Track It