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ETF Specialist

Small-Cap Multifactor Funds Pick Up Speed

There's a case to be made for these funds.

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A version of this article appeared in the November 2020 issue of Morningstar ETFInvestor. Download a complimentary copy of Morningstar ETFInvestor by visiting the website 

While most multifactor funds focus on large- and mid-cap stocks, the payoff to factor investing has tended to be larger among smaller stocks. Small-cap stocks may not always be in favor, but those who believe in factors should consider small-cap multifactor strategies, which have greater potential to beat their relevant benchmark than large-cap multifactor funds.

Ryan Jackson has a position in the following securities mentioned above: VBR. Find out about Morningstar’s editorial policies.