This Small-Cap ETF Is Outperforming QQQ -- Is It Still a Good Buy?

Small-cap stocks are making a comeback successful 2026. So far, the iShares Russell 2000 Small-Cap ETF (NYSEMKT: IWM) has delivered a full instrumentality (by nett plus value) of 18.22% twelvemonth to date, outperforming the tech-heavy Invesco QQQ ETF (NASDAQ: QQQ) (known arsenic "the Q's"), which has returned 17.57%. The iShares small-cap ETF besides outperformed QQQ successful the past year, with a full instrumentality of 41.75%:

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It mightiness dependable astonishing that smaller companies are delivering bigger returns than the 100 biggest tech companies. In the agelong run, the Q's person powerfully outperformed tiny caps. But could this caller inclination marque small-cap stocks a amended prime for the future?

Let's spot wherefore you mightiness privation to see the iShares Russell 2000 Small-Cap ETF successful your portfolio.

IWM vs. QQQ: Head-to-head examination

These 2 exchange-traded funds (ETFs) connection precise antithetic portfolios and concern approaches. Here's a speedy breakdown of the high-level metrics:

Data sources: iShares, Invesco, Yahoo! Finance.

The Invesco QQQ ETF has powerfully outperformed the iShares money implicit the past 10 years, with 21.8% annualized returns. But the iShares Russell 2000 ETF mightiness connection much intriguing maturation imaginable for the aboriginal -- its P/E ratio is 20.22, representing astir a 37% discount compared to QQQ.

It's nary astonishment that QQQ, which tracks the tech-heavy Nasdaq-100 index, is loaded with tech names: they are 66.9% of its holdings. The iShares Russell 2000 ETF is much diversified, not lone successful presumption of the sheer fig of stocks, but successful the breadth of sectors represented. Buying the iShares Russell 2000 ETF could assistance you enactment your wealth to enactment successful parts of the system that mightiness person been overlooked by artificial intelligence-focused investors.