Investors targeting small-cap stocks often aim for high upside potential, but volatility remains a significant risk. The AlphaMark Actively Managed Small Cap ETF (SMCP) offers a strategic solution by allowing speculators to spread their risk across several small companies. This ETF, actively managed by professionals, navigates market pitfalls and includes a diversified range of holdings, mitigating the impact of any single company's poor performance.
The SMCP ETF has two main advantages: active management and diversification. Active management ensures that the fund is guided by professionals who can adjust strategies in response to changing market conditions. Diversification means that the performance of the fund is not overly dependent on any single company.
Small-capitalization firms have faced challenges, particularly from elevated benchmark interest rates. Despite a surge in late 2023 due to speculation of rate cuts, inflationary pressures have slowed this momentum. However, recent data from the Labor Department shows a cooling labor market, which could encourage the Federal Reserve to adopt a more accommodative monetary policy, potentially benefiting small-cap stocks and, by extension, the SMCP ETF.
Currently, the top holdings of the SMCP fund include Abercrombie & Fitch Co. (NYSE: ANF), representing 1.48% of the fund, Fabrinet (NYSE: FN) at 1.38%, and Neogen Corporation (NASDAQ: NEOG) at 1.31%. These companies span various sectors, from retail to electronic components and healthcare, further enhancing the fund's diversification.
Despite the higher risk profile of small-cap stocks, which require more due diligence due to less analyst coverage and potential informational gaps, the unpredictability also presents opportunities for significant upside. The SMCP ETF, since its market debut in 2015, has returned 20%, although it has experienced volatility. Over the past 52 weeks, the ETF is up around 20%, indicating a potential entry point for investors as it trades within a sideways trend channel.
Currently trading at $30.60, the SMCP ETF is slightly above its 50-day moving average of $30.49 but below its 20-day moving average of $30.77. An upside resistance line has formed at the $31 level, which would be the next target for the fund. A support line at the $30 level is crucial, as falling below this threshold could trigger automated sell orders.
A significant acquisition volume spike on June 17 offers optimism for investors, especially those awaiting news that could benefit small caps, such as a dovish monetary policy shift. While past performance does not guarantee future results, the SMCP ETF presents a calculated opportunity for those looking to invest in small-cap stocks amidst current market conditions.
For more information about the AlphaMark Actively Managed Small Cap ETF and its top holdings, visit https://alphamarkadvisors.com/etf/.
