Separating small caps from large caps as a distinct asset class, and monitoring their trends separately on both an absolute and relative basis is a critical part of intermediate global tactical asset allocation.

It's simple to do, allows monthly allocation decisions to be made, and can be done with a number of diversified, customized or leveraged ETFs at very low to low expense. IWM is the best known but the most expensive for US small caps; others include IJR, IJT for sc growth specifically, SC value ETFs, SC momentum, etc.

Going up on the risk (but better on the value) spectrum, there is the well-known SCZ for EAFE-small caps, and then others for EM smallcaps but those are getting pretty far down in size, visibility and higher in risk.

FC

Mechanical Investing FAQ

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