Tapping Into Small Caps

Miles wrote:

What do you think is the best way to benefit from this recession? I’ve heard that buying stocks in a recession is a great idea.

One of the themes we’ve explored in The Kelly Letter is the tendency of small cap stocks to outperform large caps in a recovery from recession.

If you don’t feel comfortable sorting through the many small company stocks available, why not try an ETF or mutual fund?

In ETFs, IWM is the Russell 2000 index and IJR is the S&P; Smallcap 600 index.

For a more aggressive approach, try ProShares ETFs, which return 200% of the indexes. The Russell 2000 version is UWM and the S&P; Smallcap 600 version is SAA.

If you’d like an actively managed mutual fund instead, consider:

  • Keeley Small Cap Value (KSCVX) +23% avg annual 5-yr
  • Pacific Advisors Small Cap (PGSCX) +31% avg annual 5-yr
  • Royce Value Service (RYVFX) +23% avg annual 5-yr
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