Banks Carry Their Weight Among Micro-Caps

In yesterday's column, I mentioned the tightening of the spread between yields on the two- and 10-year U.S. Treasuries and its deleterious effect on bank net interest margins. Why does that matter for micro-caps? Well, it's not a well-known fact, but financials are much more heavily represented in the Russell Microcap Index than in the other major U.S. indices. 

The iShares RUMIC-mirroring Micro-Cap ETF (IWC) shows in its latest fact sheet a 26.7% weighting in financials, by far its largest sector weighting. That is nearly double the 14.2% weighting financials have in iShares' Core S&P 500 ETF (IVV) . Also, information technology has a stronger weighting in the S&P 500 than financials, not surprising given the dominance of Apple (AAPL) , Microsoft (MSFT) , Alphabet (GOOGL) and Facebook (FB) . In fact, the main index for those four stocks, the Nasdaq-100, shows a financial sector weighting of a very round 0.0%. (Apple, Alphabet and Facebook are part of TheStreet's Action Alerts PLUS portfolio.) ...442 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.

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