One really must admit, the recent obsession with the S&P 500 has been rather tiresome. For years, it’s been the darling of the market, propelled by a handful of excessively lauded companies – the “Magnificent Seven,” as they’re rather dramatically called – and a temporary frenzy surrounding artificial intelligence. Perfectly predictable, of course, but hardly stimulating. One begins to suspect the entire affair was becoming a trifle vulgar.
Now, it appears the tide may be turning. The tech sector, so recently the object of uncritical adoration, is showing a distinct lack of enthusiasm. Value stocks, those dependable old bores, are actually performing rather well. And dividend-paying companies? Positively scandalous! It suggests a degree of…sensibility is returning to the market. One hopes it lasts.
If your portfolio remains unduly weighted towards the S&P 500 or, heaven forbid, the Nasdaq-100, a reassessment is, shall we say, advisable. One wouldn’t want to be caught napping when the music stops. I’ve been giving some thought to a couple of ETFs that seem, at this juncture, rather promising.
1. iShares Core S&P Small-Cap ETF
Small companies, poor dears, have had a rather rough time of it lately. Inflation, tariffs…it’s been a catalogue of woes. The S&P 600 Small Cap index endured a most uninspiring eleven consecutive quarters of negative earnings growth. One almost felt sorry for them. But, remarkably, things are beginning to improve. Earnings growth returned in the second quarter of 2025, and forecasts suggest a rather more robust rate than that of the S&P 500 by late 2026. If this proves accurate, small caps could deliver above-average returns at a considerably lower price-to-earnings ratio. A most agreeable prospect.
The iShares Core S&P Small-Cap ETF (IJR 0.12%) tracks the S&P 600 index and appears well-positioned to capitalize on this development. And, at an expense ratio of just 0.06%, it’s one of the most economical ways to gain exposure. One appreciates efficiency, you see.
2. Vanguard Mid-Cap ETF
The mid-cap story, my dear, is rather similar to the small-cap one. A literal middle ground, if you will, where earnings growth looks encouraging and valuations remain sensible. It’s the sensible option, naturally.
The additional advantage of moving into mid-caps is the diversification they offer. The index composition is markedly different from the S&P 500. Industrials constitute the largest sector holding, at roughly 20% of assets. Consumer discretionary, financials, and technology each account for around 13% to 15%. This creates a far more balanced portfolio, less reliant on a handful of overhyped companies. A touch of prudence is always welcome.
The Vanguard Mid-Cap ETF (VO 0.05%) follows the CRSP US Mid Cap Index, a cap-weighted basket of approximately 300 stocks. And, in true Vanguard fashion, its 0.03% expense ratio is among the lowest in the industry, while remaining highly liquid and easily traded. One must admire their commitment to…economy.
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2026-03-15 23:32