Types of Style ETFs

Stylin’ with Style ETFs

If you’re an investor who has a specific investment strategy, then you may want to consider style ETFs, sometimes known as Market Cap ETFs. Style exchange traded funds come in a few shapes and sizes and consist of securities based on market-capitalization (market cap) size. And they also come categorized by investment types like growth, value, or a blend of both.

Small-Cap Style ETFs

etf market cap

If you have an affinity for small-cap stocks, then this may be the style ETF for you. Small-cap style ETFs track an index consisting of stocks with under $1 billion in market capitalization.

{Market Capitalization = price per share x outstanding shares}

For example, VB – the Vanguard Small Cap ETF, tracks the performance of the MSCI US Small Cap 1750 index, which is an index of the stocks of smaller U.S. companies. SBA Communications Corporation (SBAC) is an example of a stock in this fund.

Want to see some small-cap funds in action? Then check out these lists...

  • List of Small-Cap ETFs
  • List of Micro-Cap ETFs

Mid-Cap Style ETFs

A mid-cap ETF tracks an index consisting of stocks with market capitalization between the ranges of $1 billion and $10 billion.

For example, IJH – the iShares S&P MidCap 400 Index tracks the S&P MidCap 400 index, which is made up of companies like Ross Stores, Inc. (ROST).

If you'd like to see more examples of mid-capfunds, look no further than my list of mid-cap ETFs.

Large-Cap Style ETFs

These types of ETFs contain stocks with market-caps over $10 billion. While a company with a market-cap over $100 billion may be considered a mega-cap, for the sake of style ETFs, those companies would fall in the large-cap category.

An example of a large-cap style ETF would be EXT – the WisdomTree Total Earnings ETF, which tracks the WisdomTree Earnings index. This index consists of large-cap companies like AT&T and Exxon Mobil.

Want to see more examples of large-cap funds, then I have some for you to see...

  • List of Large-Cap ETFs
  • List of Mega-Cap ETFs

Value Style ETFs

Value style ETFs can be small, large, or mid-cap funds, but are created to track companies that are trading at a lower market price than their "true" value. Sometimes a stock may not be trading at its full potential if sector or market news is holding it down. This could be an example of a value stock. It comes down to a case of “true value” versus market opinion.

An example of a value ETF is JKF – the iShares Morningstar Large Value Index, which tracks the Morningstar Large Value Index. This large-cap value ETF consists of securities and derivatives such as swaps and options to emulate its underlying index. Bank of America (BAC) is an example of a stock in this index and fund.

Growth Style ETFs

Growth style ETFs track a growth index consisting of stocks with earnings that are expected to grow at a rate above that relative to the market. Companies in a growth fund typically don’t pay a dividend, but instead reinvest earnings back into the business.

However, it is important to note that there is a difference between a growth stock and a growth company. A growth company has cash flow or earnings that grow faster than the economy. That doesn’t necessarily make it a growth stock. And in some cases, the stock of a growth company can be overvalued.

An example of a growth style ETF is IWP – the iShares Russell Midcap Growth Index ETF, which tracks the Russell Midcap Growth index. A stock in this mid-cap ETF is Avon Products (AVP).

Blend Style ETFs

Blend style ETFs are just that. They consist of a blend of growth and value stocks and can be categorized by any market capitalization. For example, IWM – the iShares Russell 2000 Index ETF tracks the Russell 2000 Index and consists of companies like Tupperware Brands (TUP) and Bally Technologies (BYI).

As you can see, there are different style ETFs for your investing strategy. And the nice thing about ​ETFs is the advantages they have over purchasing other style investments such as style indexes and mutual funds. So maybe it’s time you got started with ETFs.

And if you want to see some of these style funds in action, look no further than my list of style ETFs.