How to Play the January Effect With Small-Cap ETFs

Zacks01-06

Wall Street was off to a volatile start in 2025, following a steep sell-off in the final weeks of 2024. Notably, the small-cap Russell 2000 Index fell 8.4% in December, marking its worst month since ...

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Notably, the small-cap Russell 2000 Index fell 8.4% in December, marking its worst month since ...</p>\n\n<a href=\"https://finance.yahoo.com/news/play-january-effect-small-cap-143000792.html\">Source Link</a>\n\n</div>\n","source":"yahoofinance","html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>How to Play the January Effect With Small-Cap ETFs</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nHow to Play the January Effect With Small-Cap ETFs\n</h2>\n\n<h4 class=\"meta\">\n\n\n2025-01-06 22:30 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/play-january-effect-small-cap-143000792.html><strong>Zacks</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Wall Street was off to a volatile start in 2025, following a steep sell-off in the final weeks of 2024. Notably, the small-cap Russell 2000 Index fell 8.4% in December, marking its worst month since ...</p>\n\n<a href=\"https://finance.yahoo.com/news/play-january-effect-small-cap-143000792.html\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"FT_SY_MNQ","symbol_name":"微型NQ100指数","start_time":0,"source_url":"https://finance.yahoo.com/news/play-january-effect-small-cap-143000792.html","article_id":"2501521162","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2501521162","pubTimestamp":1736173800,"columns":[],"sourceInfo":{"source_id":"yahoofinance","name":"雅虎金融"},"weMediaInfo":null,"summary":"Wall Street was off to a volatile start in 2025, following a steep sell-off in the final weeks of 2024. Notably, the small-cap Russell 2000 Index fell 8.4% in December, marking its worst month since September 2022. Will its fortune rebound in January as investors brace for the “January Effect?”The January Effect is a seasonal increase in stock prices, where small-cap stocks outperform large-caps during January. This is driven by tax-loss harvesting, where investors sell losing positions in December for tax purposes and reinvest in January. Additionally, year-end bonuses and portfolio rebalancing drive the stock market higher in the first month of the year.For investors seeking to capitalize on this opportunity, small-cap ETFs like iShares Core S&P Small-Cap ETF IJR iShares Russell 2000 ETF IWM, Vanguard Small-Cap ETF VB, Schwab U.S. Small-Cap ETF SCHA and SPDR Portfolio S&P 600 Small Cap ETF SPSM could be solid pure plays. These have a solid Zacks ETF Rank #2  each.iShares Core S&P Sma","collect":0,"end_time":0,"defaultTopTitle":"yahoo.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"SG9999001077.SGD":"United International Growth Fund SGD","BK4550":"红杉资本持仓","LU0130517989.USD":"HARRIS ASSOCIATES US VALUE EQUITY \"R\" INC","LU0640476718.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQ \"AU\" (USD) ACC","LU1153585028.USD":"BGF GLOBAL LONG-HORIZON EQUITY  \"A4\" (USD) INC","SG9999014039.USD":"UNITED GLOBAL DURABLE EQUITIES (USDHDG) INC","BK4535":"淡马锡持仓","LU1280957306.USD":"THREADNEEDLE (LUX) US CONTRARIAN CORE EQUITIES \"AUP\" (USD) INC","BK4589":"SVB概念","SG9999014005.SGD":"United Global Durable Equities Fund Acc SGD","LU0345774631.USD":"NINETY ONE GSF AMERICAN FRANCHISE \"A\" (USD) INC","TWM":"罗素2000指数两倍做空ETF","LU1861217088.USD":"贝莱德金融科技A2","LU2264538146.SGD":"Fullerton Lux Funds - Global Absolute Alpha A Acc SGD","BK4504":"桥水持仓","LU0106831901.USD":"贝莱德世界金融基金A2","FDN":"First Trust Dow Jones Internet I","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","LU0011850046.USD":"贝莱德全球长线股票 A2 USD","LU1861220207.SGD":"Blackrock FinTech A2 SGD-H","IWM":"罗素2000指数ETF","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","VB":"小型股指数ETF-Vanguard MSCI","BK4127":"投资银行业与经纪业","SCHW":"嘉信理财","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","SRTY":"罗素2000指数三倍做空ETF-ProShares","LU0477156953.USD":"HARRIS ASSOCIATES US VALUE EQUITY \"RE\" (USD) ACC","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","LU1035773651.USD":"AB SICAV I - GLOBAL VALUE PORTFOLIO \"AD\" (USD) INC","SPSM":"SPDR Portfolio S&P 600 Small Cap ETF","SCHA":"Schwab US Small-Cap ETF","RWM":"罗素2000指数反向ETF","LU2360107671.USD":"BGF FINTECH \"A4\" (USD) INC","IWN":"罗素2000价值股指数ETF-iShares","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","TZA":"罗素2000指数三倍做空ETF","BK4585":"ETF&股票定投概念","LU1069347547.HKD":"AB SICAV I - GLOBAL VALUE PORTFOLIO \"AD\" (HKD) INC","BK4534":"瑞士信贷持仓","IWO":"罗素2000成长股指数ETF","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H","SG9999014021.USD":"UNITED GLOBAL DURABLE EQUITIES (USDHDG) ACC","UWM":"罗素2000指数ETF两倍做多","IJR":"标普小型股600指数ETF-iShares","LU1988902786.USD":"FULLERTON LUX FUNDS GLOBAL ABSOLUTE ALPHA \"I\" (USD) ACC","LU1791807156.HKD":"BGF WORLD FINANCIALS \"A2\" (HKDHDG) ACC"},"translate_title":"如何利用小盘ETF发挥一月效应","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"VB":1,"SCHA":1,"SPSM":1,"IWM":1,"IJR":1,"SCHW":0.9,"FDN":0.9,"RWM":0.6,"SRTY":0.6,"TWM":0.6,"TZA":0.6,"UWM":0.6,"MNQmain":0.6,"MRTYmain":0.6,"IWN":0.6,"IWO":0.6},"content_text":"Wall Street was off to a volatile start in 2025, following a steep sell-off in the final weeks of 2024. Notably, the small-cap Russell 2000 Index fell 8.4% in December, marking its worst month since September 2022. Will its fortune rebound in January as investors brace for the “January Effect?”The January Effect is a seasonal increase in stock prices, where small-cap stocks outperform large-caps during January. This is driven by tax-loss harvesting, where investors sell losing positions in December for tax purposes and reinvest in January. Additionally, year-end bonuses and portfolio rebalancing drive the stock market higher in the first month of the year.\nIs January Effect Real in 2025?\nSmall-caps, which were hit largely by the Fed’s less dovish stance for 2025, might rebound in January. Though the Fed envisions only two rate cuts in 2025, it slashed interest rates three times last year, bringing down the benchmark rate to 4.25-4.50%. As the pint-sized companies have a higher debt burden (mostly at floating rates), lower rates lead to reduced borrowing costs, helping small businesses expand their operations easily and resulting in increased profitability. President-elect Trump's policies of deregulation, lower corporate tax rates, restriction on illegal immigration, and enactment of new tariffs would provide more stimulus to the U.S. economy and benefit small-caps the most. This shift will allow small-cap businesses to operate with increased profitability. Trump will take office on Jan. 20. For small-cap companies, which often lack the financial resources of larger firms to manage regulatory compliance, reduced regulations mean lower operational costs. Trump’s proposed tariffs against major U.S. trading partners would boost the greenback. A strong dollar provides an edge to domestic-focused companies as small caps do not have much exposure to the international market. Trump's protectionist stance will benefit domestic producers, as higher import tariffs raise costs for foreign competitors (read: ETFs to Benefit From Dollar's Best Year in a Decade).Further, the economy is on a solid footing, household net worth is at an all-time high and labor market is healthy. As small-cap companies are more domestically tied, they are poised to outperform when the economy improves. Moreover, escalation in geopolitical tension will provide a boost to domestically-focused stocks.\nHow to Bet on January Effect?\nFor investors seeking to capitalize on this opportunity, small-cap ETFs like iShares Core S&P Small-Cap ETF IJR¸ iShares Russell 2000 ETF IWM, Vanguard Small-Cap ETF VB, Schwab U.S. Small-Cap ETF SCHA and SPDR Portfolio S&P 600 Small Cap ETF SPSM could be solid pure plays. These have a solid Zacks ETF Rank #2 (Buy) each.iShares Core S&P Small-Cap ETF (IJR)iShares Core S&P Small-Cap ETF offers exposure to U.S. small-cap stocks and follows the S&P SmallCap 600 Index. iShares Core S&P Small-Cap ETF holds 675 stocks in its basket, with none accounting for more than 0.7% of the assets. Financials, industrials, consumer discretionary, information technology and healthcare are the top five sectors with double-digit exposure each. iShares Core S&P Small-Cap ETF has AUM of $87.4 billion and trades in an average daily volume of 4 million shares. The product charges investors 6 bps in annual fees (read: 5 Small-Cap ETFs That Outperformed Russell 2000 in the Last 3 Months).iShares Russell 2000 ETF (IWM)iShares Russell 2000 ETF is the largest and most popular ETF in the small-cap space, with an AUM of $72 billion and an average daily volume of 25 million shares. It holds well-diversified 1,972 stocks in its basket and has key holdings in financials, industrials, healthcare, information technology and consumer discretionary.iShares Russell 2000 ETF charges 19 bps in annual fees.Vanguard Small-Cap ETF (VB) Vanguard Small-Cap ETF follows the CRSP US Small Cap Index and holds a basket of 1,379 stocks, with none holding more than 0.7% of the assets. Vanguard Small-Cap ETF is widely spread across various sectors, with industrials, consumer discretionary, financials, information technology and healthcare being the top five.Vanguard Small-Cap ETF has AUM of $63.2 billion and trades in a solid average daily volume of about 783,000 shares. VB charges 5 bps in fees per year from investors. Schwab U.S. Small-Cap ETF (SCHA) Schwab U.S. Small-Cap ETF tracks the Dow Jones U.S. Small-Cap Total Stock Market Index, holding 1,744 stocks in its basket. Each security accounts for less than 0.5% of the assets. Schwab U.S. Small-Cap ETF is widely spread across sectors, with financials, industrials, health care, information technology and consumer discretionary having double-digit exposure each. Schwab U.S. Small-Cap ETF has AUM of $18.3 billion and sees a solid volume of around 2 million shares a day. It has an expense ratio of 0.04%. SPDR Portfolio S&P 600 Small Cap ETF (SPSM)SPDR Portfolio S&P 600 Small Cap ETF follows the S&P Small Cap 600 Index, holding 606 stocks in its basket. None of the firms make up more than 0.6% of the assets. SPDR Portfolio S&P 600 Small Cap ETF is also widely spread out across sectors, with financials, industrials, consumer discretionary, information technology and healthcare having double-digit exposure each (read: 4 Top Stocks in the S&P 500 ETF That More Than Doubled in 2024). SPDR Portfolio S&P 600 Small Cap ETF has been able to manage $12.4 billion in its asset base and trades in a good volume of 1.7 million shares a day on average. SPSM charges 3 bps in annual fees.\nWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report\niShares Russell 2000 ETF (IWM): ETF Research Reports\niShares Core S&P Small-Cap ETF (IJR): ETF Research Reports\nSchwab U.S. Small-Cap ETF (SCHA): ETF Research Reports\nVanguard Small-Cap ETF (VB): ETF Research Reports\nSPDR Portfolio S&P 600 Small Cap ETF (SPSM): ETF Research Reports\nTo read this article on Zacks.com click here.\nZacks Investment Research","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":0},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.30.0","shortVersion":"4.30.0","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2501521162"}