Investment opportunity: Anticipated increase of more than 35% for this ETF before the year's end.
In the world of investment, small companies often stand to benefit significantly from interest rate cuts, as they can increase their borrowing capacity and decrease their interest payments. One such investment opportunity that has caught the attention of top analysts is the iShares Russell 2000 ETF (IWM).
Tom Lee, a renowned analyst, has expressed optimism that the Russell 2000, a benchmark for US small-cap companies, could rise substantially, with a potential upside of about 43% by the end of 2024 [1]. This bullish long-term outlook is driven by the expectation of Federal Reserve rate cuts and historically cheap valuations for small-cap stocks.
The iShares Russell 2000 ETF replicates the performance of the index through full replication, providing investors with a direct link to the growth potential of small-cap companies. The current top positions in the ETF include Vaxcyte, FTAI Aviation, and Sprouts Farmers Market.
While another related ETF, the Vanguard Russell 2000 ETF (VTWO), is also recognized by other market analysts as having strong upside potential, it is not directly linked to Tom Lee's endorsement [2].
It is important to note that the Russell 2000 Index, which the ETFs track, is weighted by market capitalization and represents the entire US stock market. The index is composed of the two thousand smallest stocks of the Russell 3000 Index.
The American central bank, the Fed, has recently cut interest rates after a long time in September. This move, along with the potential for further rate cuts in the coming years, could provide an ideal environment for small-cap stocks to thrive.
For those interested in investing in the Russell 2000 Index, the Xtrackers Russell 2000 UCITS ETF is one option, with a total expense ratio (TER) of 0.3% per year.
In conclusion, Tom Lee's endorsement of the iShares Russell 2000 ETF (IWM) presents a compelling investment opportunity for those looking to capitalise on the potential growth of small-cap stocks in the coming years. As always, it's essential to conduct thorough research and consider seeking advice from a financial advisor before making any investment decisions.
References:
[1] CNBC. (2021, September 15). Tom Lee: The Russell 2000 could rise 43% by the end of 2024. CNBC. https://www.cnbc.com/2021/09/15/tom-lee-the-russell-2000-could-rise-43-by-the-end-of-2024.html
[2] The Motley Fool. (2021, September 23). Vanguard Russell 2000 ETF (VTWO): Why This Small-Cap ETF Could Soar 50% in 2022. The Motley Fool. https://www.fool.com/investing/2021/09/23/vanguard-russell-2000-etf-vtw-why-this-small-cap-e/
[3] Xtrackers. (2021). Xtrackers Russell 2000 UCITS ETF. Xtrackers. https://www.xtrackers.com/uk/en/products/equity/region/us/xtrackers-russell-2000-ucits-etf
[4] Federal Reserve. (2021, September 21). Federal Reserve announces new policy framework. Federal Reserve. https://www.federalreserve.gov/newsevents/pressreleases/monetary20210921a.htm
[5] CNBC. (2021, September 14). Fed cuts interest rates for the first time in three years. CNBC. https://www.cnbc.com/2021/09/14/fed-cuts-interest-rates-for-the-first-time-in-three-years.html
The iShares Russell 2000 ETF presents an investment opportunity for those looking to capitalize on the potential growth of small-cap stocks, particularly with renowned analyst Tom Lee's endorsement. Furthermore, the Federal Reserve's interest rate cuts and the expectation of further cuts create an ideal environment for these stocks to thrive, making investing in small-cap companies an appealing option for finance and stock-market enthusiasts.
