Investing in hundreds or even thousands of companies at once can help smooth out market volatility. 

However with the rise of thematic ETFs, even successful funds can be exposed to market dips. 

The following three funds have had a successful track record of returns, but underperformed last year relative to historic performance.

This could make them attractive investment options at current prices. 

Etfs Morningstar Global Technology ETF (ASX: TECH)

This ASX ETF targets companies positioned to benefit from the increased adoption of technology, including companies whose principal business is in offering computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), and/or cloud and edge computing infrastructure and hardware.

Since its inception in 2017, the fund has risen more than 100%. 

This includes almost 8% p.a. returns over the last 5 years. 

This hasn't come without years of volatility.

It is down 10% over the last 12 months. 

With that in mind, this fund has exposure to sectors that are paramount to the growth of technology and cloud computing.

These include semiconductors, software and electronics. 

At the time of writing, it includes 38 underlying holdings, with its largest geographical exposure being to: 

• United States (60.76%)
• Netherlands (8.90%)
• Germany (6.65%)

Betashares India Quality ETF (ASX: IIND)

Another thematic fund with a good track record, but a down year is the Betashares India Quality ETF. 

As the name suggests, it targets high quality Indian companies. 

According to Betashares, it includes 30 high quality Indian companies based on a combined ranking of the following key factors: high profitability, low leverage and high earnings stability.

The thematic nature of this fund means it relies on the performance of the Indian economy. 

However despite falling more than 5% over the last year, its long-term prospects are intriguing. 

India's economy is one of the fastest-growing in the world, with future growth potential underpinned by strong structural fundamentals.

India is expected to remain among the best performing economies globally; the IMF forecasts GDP to expand 6.4% p.a. in the next year. 

Furthermore, this fund has actually already shown a strong track record. 

It has risen 60% since March 2020. 

iShares International Equity ETFs – iShares S&P Small-Cap ETF (ASX: IJR)

As the name suggests, this fund focuses on small-cap US stocks. 

According to iShares, it tracks the performance of the S&P Small-Cap 600, before fees and expenses. The index is designed to measure the performance of small-capitalisation US equities.

In the last 12 months it only rose 1%. 

However it has an average annual return of 10% over the last 5 years. 

The post 3 undervalued ASX ETFs with proven track records appeared first on The Motley Fool Australia.

As will a slew of other investors holding iShares ASX exchange-traded funds (ETFs) comprised of international shares.

Here's how much you can expect to receive, according to the final distributions schedule.

If you've chosen to reinvest your dividends via the distribution reinvestment plan (DRP), we've also included those DRP unit prices below.

Here's how much you'll receive in dividends

Here is a summary of the dividend amounts that investors in these iShares ETFs will receive today.

The iShares S&P 500 ETF (ASX: IVV) will pay 20.14 cents per unit. The DRP price is $68.66 per unit.

The iShares Global 100 ETF (ASX: IOO) will pay 56.02 cents per unit. The DRP price is $187.62.

The iShares Asia 50 ETF (ASX: IAA) will pay 102.25 cents per unit. The DRP price is $142.61.

The iShares MSCI Emerging Markets ETF (ASX: IEM) will pay 60.22 cents per unit. The DRP price is $81.78.

The iShares Europe ETF (ASX: IEU) will pay 111.47 cents per unit. The DRP price is $101.12.

The iShares MSCI Japan ETF (ASX: IJP) will pay 463.45 cents per unit. The DRP price is $112.01.

The iShares S&P Mid-Cap ETF (ASX: IJH) will pay 20.52 cents per unit. The DRP price is $50.12.

The iShares S&P Small-Cap ETF (ASX: IJR) will pay 72.41 cents per unit. The DRP price is $183.87.

The iShares Global Consumer Staples ETF (ASX: IXI) will pay 70.97 cents per unit. The DRP price is $96.03.

The iShares Global Healthcare ETF (ASX: IXJ) will pay 72.35 cents per unit. The DRP price is $144.79.

The iShares S&P China Large-Cap ETF (ASX: IZZ) will pay 47.14 cents per unit. The DRP price is $56.91.

More dividends to come

If you hold iShares ETFs comprised of ASX shares, you will receive your dividend payments on 19 January.

Blackrock finalised the amounts to be paid this week.

Some examples of these ETFS include the iShares Core S&P/ASX 200 ETF (ASX: IOZ), which will pay 18.37 cents per unit.

iShares S&P/ASX 20 ETF (ASX: ILC) will pay 19.91 cents per unit.

iShares S&P/ASX Small Ordinaries ETF (ASX: ISO) will pay 4.78 cents per unit.

iShares Yield Plus ETF (ASX: IYLD) will pay investors 38.01 cents per unit.

iShares 15+ Year Australian Government Bond ETF (ASX: ALTB) will pay 64.48 cents per unit.

iShares S&P/ASX Dividend Opportunities ESG Screened ETF (ASX: IHD) will pay 14.52 cents per unit.

The post Own IVV or IOO ETFs? It's dividend payday for you! appeared first on The Motley Fool Australia.

The ETFs, which all hold international shares, include iShares S&P 500 ETF (ASX: IVV) and iShares Global 100 ETF (ASX: IOO).

According to the final distributions schedule, BlackRock will pay ASX ETF investors next Friday, 9 January.

BlackRock has also announced the unit price for each ETF's distribution reinvestment plan (DRP).

Here are the details below.

Dividend amounts for iShares ASX ETF investors

Here is a summary of the dividend amounts that investors in these iShares ETFs will receive on 9 January.

The iShares S&P 500 ETF (ASX: IVV) will pay 20.139782 cents per unit. The DRP price is $68.66.

The iShares Global 100 ETF (ASX: IOO) will pay 56.022206 cents per unit. The DRP price is $187.62.

The iShares Asia 50 ETF (ASX: IAA) will pay 102.246930 cents per unit. The DRP price is $142.61.

The iShares MSCI Emerging Markets ETF (ASX: IEM) will pay 60.218221 cents per unit. The DRP price is $81.78.

The iShares Europe ETF (ASX: IEU) will pay 111.471175 cents per unit. The DRP price is $101.12.

The iShares MSCI Japan ETF (ASX: IJP) will pay 463.446530 cents per unit. The DRP price is $112.01.

The iShares S&P Mid-Cap ETF (ASX: IJH) will pay 20.521395 cents per unit. The DRP price is $50.12.

The iShares S&P Small-Cap ETF (ASX: IJR) will pay 72.410620 cents per unit. The DRP price is $183.87.

The iShares Global Consumer Staples ETF (ASX: IXI) will pay 70.973956 cents per unit. The DRP price is $96.03.

The iShares Global Healthcare ETF (ASX: IXJ) will pay 72.347038 cents per unit. The DRP price is $144.79.

The iShares S&P China Large-Cap ETF (ASX: IZZ) will pay 47.139823 cents per unit. The DRP price is $56.91.

More dividend announcements to come

BlackRock will announce the estimated dividends for a second group of ETFs, which all hold ASX shares, on 6 January.

Those ETFs will include the iShares Core S&P/ASX 200 ETF (ASX: IOZ) and the iShares S&P/ASX 20 ETF (ASX: ILC).

The ex-dividend date will be 7 January.

BlackRock will announce the finalised distribution amounts on 8 January and send payments to investors on 19 January.

The post Own IVV or IOO ETFs? Here's your next dividend appeared first on The Motley Fool Australia.

Looking at indexes like the S&P/ASX 200 Index (ASX: XJO) and the S&P 500 Index (SP: .INX) over the last 5 years or so, it's clear that those that buy and hold for the long term, are able to weather the storm and come out the other side. 

Despite a global pandemic, tariff turmoil, and international conflicts, these markets remain 40%-80% higher than they were 5 years ago. Both are currently flirting with record highs.

But with markets hovering around record highs, where do we find value?

Here are three ASX ETFs I am monitoring. All three are down this year, but I believe they could reward long-term investors. 

iShares S&P Small-Cap ETF (ASX: IJR)

The fund aims to provide investors with the performance of the S&P Small-Cap 600. 

It has fallen more than 8% year to date. 

According to Reuters, the small-cap equity funds segment suffered the biggest weekly net sales since December 18, approximately $5.2 billion. 

I believe these macro trends can still bring more short-term volatility for small-cap companies. 

However, this fund gives long-term investors an opportunity to gain exposure in small-cap companies without the same risk that typically comes with this type of investment. 

After a poor year, it now sits well below its all-time high.

Despite this, the fund has provided an average annual return of 9.41% over the last 10 years. 

Global X Cybersecurity ETF (ASX: BUGG)

As the name suggests, this fund offers exposure to companies that stand to benefit from the increased adoption of cybersecurity technology. 

Specifically, it offers exposure to those whose principal business is in the development and management of security protocols preventing intrusion and attacks on systems, networks, applications, computers, and mobile devices.

It is a relatively new fund, first listed in September 2023. Since then, it has risen an impressive 21.92%. 

However, it is down more than 5% this year. 

I believe this dip offers value for investors aiming to get exposure to the global cybersecurity market set to play a significant role in the global economy for years to come.

According to Global X, the Cybersecurity Market size is estimated at USD 203.78 billion in 2024, and is expected to reach USD 350.23 billion by 2029.

VanEck Vectors Morningstar Wide Moat ETF (ASX: MOAT)

MOAT gives investors exposure to a diversified portfolio of attractively priced US companies with sustainable competitive advantages, according to Morningstar's equity research team. 

It has fallen more than 7% so far this year. 

Despite a poor year, it has brought investors annualised returns of more than 10% over the last 10 years, and I believe it is slightly undervalued considering the quality of its portfolio. 

It includes blue-chip companies like Boeing, Walt Disney, Alphabet, Campbell's Company, and Nike. 

The post Long term bargains: Could these ASX ETFs be undervalued? appeared first on The Motley Fool Australia.

Let's take a look at how much you'll receive.

If you chose to participate in the distribution reinvestment plan (DRP) for any of these iShares ETFs, we've provided the DRP prices, too.

It's dividend day for IVV ETF investors and others

Here is a summary of the dividend amounts that people invested in these iShares ETFs will receive today.

The iShares S&P 500 ETF (ASX: IVV) will pay 17.371762 cents per unit. The DRP price is 62.963308 cents.

The iShares Global 100 ETF (ASX: IOO) will pay 144.788408 cents per unit. The DRP price is 162.474210 cents.

The iShares Core S&P/ASX 200 ETF (ASX: IOZ) will pay 28.004199 cents per unit. The DRP price is 34.308186 cents.

The iShares Asia 50 ETF (ASX: IAA) will pay 317.017910 cents per unit. The DRP price is 120.104281 cents.

The iShares Core Composite Bond ETF (ASX: IAF) will pay 71.863797 cents per unit. The DRP price is 103.551430 cents.

The iShares MSCI Emerging Markets ETF (ASX: IEM) will pay 73.321424 cents per unit. The DRP price is 73.626987 cents.

The iShares Europe ETF (ASX: IEU) will pay 201.329885 cents per unit. The DRP price is 95.752689 cents.

The iShares MSCI South Korea ETF (ASX: IKO) will pay 142.553569 cents per unit. The DRP price is 111.875719 cents.

The iShares S&P/ASX 20 ETF (ASX: ILC) will pay 35.765356 cents per unit. The DRP price is 32.314116 cents.

But wait, there's more…

The iShares Government Inflation ETF (ASX: ILB) will pay 45.856295 cents per unit. The DRP price is 126.033139 cents.

The iShares MSCI Japan ETF (ASX: IJP) will pay 99.526157 cents per unit. The DRP price is 114.127567 cents.

The iShares S&P Mid-Cap ETF (ASX: IJH) will pay 15.907814 cents per unit. The DRP price is 47.288231 cents.

The iShares S&P Small-Cap ETF (ASX: IJR) will pay 56.095190 cents per unit. The DRP price is 167.136029 cents.

The iShares S&P/ASX Small Ordinaries ETF (ASX: ISO) will pay 5.747119 cents per unit. The DRP price is 4.931342 cents.

The iShares Global Consumer Staples ETF (ASX: IXI) will pay 103.428384 cents per unit. The DRP price is 98.952519 cents.

The iShares Global Healthcare ETF (ASX: IXJ) will pay 135.427098 cents per unit. The DRP price is 130.135897 cents.

How did ASX IVV perform in FY25?

The IVV ETF seeks to track the performance of the S&P 500 Index (SP: .INX) before fees.

US shares outperformed ASX shares again in FY25, and IVV ETF investors reaped the benefits.

The IVV ETF increased by 15.02% and delivered total returns (including dividends) of 15.13%, according to BlackRock.

Data from S&P Global shows the S&P 500 rose by 13.63% to close at 6,204.95 points on 30 June.

If we add dividends, the S&P 500's total gross return for the year was 15.16%.

The difference between the growth rate of the S&P 500 and the IVV ETF represents the impact of the currency exchange.

In Australian dollar terms, S&P Global data shows the S&P 500 rose by 15.8%, with total gross returns of 17.36%.

The post Own IVV ETF or other iShares ASX ETFs? It's dividend payday for you! appeared first on The Motley Fool Australia.

According to the final distributions schedule, iShares will pay investors next Friday, 11 July.

A distribution reinvestment plan (DRP) is available for all iShares ETFs.

iShares has also announced the DRP prices for this next round of distributions. We have included those amounts below.

It's payday for IVV ETF investors and others

Here is a summary of the dividend amounts that people invested in this selection of iShares ETFs will receive on 11 July.

The iShares S&P 500 ETF (ASX: IVV) will pay 17.371762 cents per unit. The DRP price is 62.963308 cents.

The iShares Global 100 ETF (ASX: IOO) will pay 144.788408 cents per unit. The DRP price is 162.474210 cents.

The iShares Core S&P/ASX 200 ETF (ASX: IOZ) will pay 28.004199 cents per unit. The DRP price is 34.308186 cents.

The iShares Asia 50 ETF (ASX: IAA) will pay 317.017910 cents per unit. The DRP price is 120.104281 cents.

The iShares Core Composite Bond ETF (ASX: IAF) will pay 71.863797 cents per unit. The DRP price is 103.551430 cents.

The iShares MSCI Emerging Markets ETF (ASX: IEM) will pay 73.321424 cents per unit. The DRP price is 73.626987 cents.

The iShares Europe ETF (ASX: IEU) will pay 201.329885 cents per unit. The DRP price is 95.752689 cents.

The iShares MSCI South Korea ETF (ASX: IKO) will pay 142.553569 cents per unit. The DRP price is 111.875719 cents.

The iShares S&P/ASX 20 ETF (ASX: ILC) will pay 35.765356 cents per unit. The DRP price is 32.314116 cents.

Here are some more ASX ETFs…

The iShares Government Inflation ETF (ASX: ILB) will pay 45.856295 cents per unit. The DRP price is 126.033139 cents.

The iShares MSCI Japan ETF (ASX: IJP) will pay 99.526157 cents per unit. The DRP price is 114.127567 cents.

The iShares S&P Mid-Cap ETF (ASX: IJH) will pay 15.907814 cents per unit. The DRP price is 47.288231 cents.

The iShares S&P Small-Cap ETF (ASX: IJR) will pay 56.095190 cents per unit. The DRP price is 167.136029 cents.

The iShares S&P/ASX Small Ordinaries ETF (ASX: ISO) will pay 5.747119 cents per unit. The DRP price is 4.931342 cents.

The iShares Global Consumer Staples ETF (ASX: IXI) will pay 103.428384 cents per unit. The DRP price is 98.952519 cents.

The iShares Global Healthcare ETF (ASX: IXJ) will pay 135.427098 cents per unit. The DRP price is 130.135897 cents.

The post Own IVV ETF or other iShares ASX ETFs? Next dividends and DRP prices revealed… appeared first on The Motley Fool Australia.

Scores of ASX ETFs are catering to this demand, and some have just announced their next round of distributions (or dividends).

Here are three examples.

3 ETFs reveal next distribution payments

Vanguard US Total Market Shares Index ETF (ASX: VTS)

The Vanguard US Total Market Shares Index ETF tracks the CRSP US Total Market Index (NASDAQ: CRSPTM1) before fees.

It provides investors with exposure to about 3,600 companies on the US share market.

Vanguard has announced that the ASX VTS will pay investors 98.54 US cents per ETF unit held, on 29 April.

Based on today's exchange rate, that equates to about AU$1.56 per ETF unit held.

Vanguard will convert the distribution amount into Australian currency at the going rate on 22 April.

The ex-dividend date was yesterday, and the record date is today.

iShares S&P 500 ETF (ASX: IVV)

The iShares S&P 500 ETF tracks the S&P 500 Index (SP: .INX) before fees.

This means it seeks to mirror the performance of the 500 largest companies listed on the US share market.

ASX IVV was the most popular equity purchased by Aussie investors via the online trading platform Stake last year.

iShares has announced that the ASX IVV will pay shareholders an estimated 16.016090 AU cents per unit held, on 9 April.

iShares will confirm the distribution amount on 31 March.

The ex-dividend date is today, and the record date is 31 March.

iShares S&P Small-Cap ETF (ASX: IJR)

The iShares S&P Small-Cap ETF aims to track the performance of the S&P Small-Cap 600 Index before fees.

This ASX ETF provides exposure to 600 small-cap companies listed on the US stock market.

iShares has announced that the ASX IJR will pay shareholders an estimated 45.889049 AU cents per unit held, on 9 April.

iShares will confirm the distribution amount on 31 March.

The ex-dividend date is today, and the record date is 31 March.

Why are Aussie investors attracted to US shares?

The US market has delivered exceptional returns over the past two years, and this has inspired many Australians to invest.

Last year, the S&P 500 delivered a total gross annual return (including dividends) of 25.02%, according to S&P Global data.

This compares to a respectable but inferior return of 11.44% for the S&P/ASX 200 Index (ASX: XJO) last year.

Looking ahead, US shares may not deliver anywhere near these impressive returns in 2025.

Concerns about economic growth recently prompted Goldman Sachs to downgrade its forecast returns for the S&P 500.

The post Own US shares via ASX ETFs? Here's how much you'll receive in dividends and when appeared first on The Motley Fool Australia.

Small-cap companies tend to do better when rates are lower because this reduces the cost of the debt they need to carry to keep on investing in their growth and development.

ETF issuer Vanguard says small-cap options are already more popular with US investors following the Federal Reserve's two interest rate cuts this year.

There was the bigger-than-expected first rate cut of 50 basis points in September, followed by a second rate cut of 25 basis points this month.

In the latest quarterly Vanguard ETF Industry Perspectives newsletter, equity index senior investment product manager, Andrey Kotlyarenko said money flows into small-cap US ETFs have been increasing.

Historically, he said this was a pattern that usually coincided with interest rate cuts.

Kotlyarenko commented:

The Fed's 50-basis-point rate cut—its first cut since before the Fed began raising rates in response to the inflationary spike driven by the COVID-19 pandemic—created a fresh opportunity to look closely at small-cap equities, which historically have outperformed the broader market after rate cuts.

The lower cost of capital that has followed rate cuts has correlated with investors showing greater interest in smaller companies, whose growth prospects can be hampered when borrowing costs are high.

Historical link between small-cap ETFs and interest rates

With further rate cuts expected in many countries next year, including Australia, Kotlyarenko said investors appeared more bullish on small-cap stocks now.

Kotlyarenko said Q3 inflows into small-cap ETFs in the US had leapt to $16.5 billion. This was higher than the inflows over the previous six months, which only totalled $9.4 billion.

The trend of small-cap ETFs performing better when rates are lower or falling is universal across the most recent historical rate-cutting cycles, Kotlyarenko said.

He commented:

During other rate-cutting cycles—such as the dot-com bubble, the global financial crisis, and the post-COVID pandemic recovery—interest in small-caps spiked.

In the 12 months following those initial rate cuts, returns of the four main US small-cap indexes performed strongly.

More to the point, each of these indexes outperformed the broad equity market during those past rate-cutting cycles.

But crucially, each small-cap index isn't built quite the same as another, so their performances can diverge.

For example, during the first year of COVID-19, when central banks worldwide slashed interest rates, the four main US small-cap indexes soared.

However, there was a 6.66% disparity in performance between the No. 1 performing index, the Russell 2000, and the No. 4 performing index, the CRSP US Small Cap Index.

Let's examine some of the ASX ETFs available to Aussie investors that track small-cap stocks either here or overseas, and review how they are performing in the year-to-date (YTD) and over the past 12 months.

How are small-cap ASX ETFs performing?

In 2024, we have indeed seen an increase in the unit price of several ASX small-cap ETFs.

Not only that, but some of them are outperforming ASX ETFs that track the ASX 200 or ASX 300, which incorporate large-caps like Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP).

Below are four examples of ASX ETFs tracking small-cap shares. Take note of their year-to-date and 12-month growth rates compared to those of two peers that track the ASX 200 and ASX 300.

The iShares Core S&P/ASX 200 ETF (ASX: IOZ) tracks the S&P/ASX 200 Index (ASX: XJO). On Tuesday, it is trading for $33.84 per unit, up 9.7% YTD and 19.84% over 12 months.

The Vanguard Australian Shares Index ETF (ASX: VAS) tracks the S&P/ASX 300 Index (ASX: XKO). Today, it is trading for $104.26 per unit, up 10.69% YTD and 20.12% over 12 months.

ASX ETFs tracking Aussie small-cap shares

iShares S&P/ASX Small Ordinaries ETF (ASX: ISO)

The iShares S&P/ASX Small Ordinaries ETF is trading at $4.85 per unit. It's up 6.59% in 2024 and up 17.15% over the past 12 months.

The ISO ETF aims to track the performance of the S&P/ASX Small Ordinaries Accumulation Index, before fees.

The index measures the performance of small-cap ASX shares in the ASX 300, excluding the S&P/ASX 100 Index (ASX: XTO).

The ETF's top three underlying holdings are Life 360 Ltd (ASX 360), Alcoa Corporation CDI (ASX: AAI), and Zip Co Ltd (ASX: ZIP). The management fee is 0.55%.

Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO)

The Vanguard MSCI Australian Small Companies Index ETF is trading at $69.76 per unit. It's up 9.86% in 2024 and up 18.44% over the past 12 months.

The VSO ETF aims to track the performance of the MSCI Australian Shares Small Cap Index before fees. The index includes stocks that pass certain liquidity and market capitalisation criteria.

Its top three holdings are Evolution Mining Ltd (ASX: EVN), NextDC Ltd (ASX: NXT), and JB Hi-Fi Ltd (ASX: JBH). The management fee is 0.3%.

ASX ETFs tracking US or international small-cap shares

iShares S&P Small-Cap ETF (ASX: IJR)

The iShares S&P Small-Cap ETF is trading at $196 per unit. It's up 22.68% in 2024 and up 33.79% over the past 12 months.

The IJR ETF aims to track the performance of the S&P Small-Cap 600, before fees.

The index measures the performance of the small-cap segment of the US stock market. It is comprised of 600 companies with a market capitalisation of between US$1 billion and US$6.7 billion.

The ETF's top three equity holdings are Mueller Industries Inc (NYSE: MLI), Carpenter Technology Corporation (NYSE: CRS), and Comerica Inc (NYSE: CMA). The management fee is 0.07%.

Vanguard MSCI International Small Companies Index ETF (ASX: VISM)

The Vanguard MSCI International Small Companies Index ETF is trading at $70.31 per unit. It's up 17.84% in 2024 and up 25.06% over the past 12 months.

The VISM ETF seeks to track the returns of the MSCI World ex-Australia Small Cap Index (with net dividends reinvested) in Australian dollars before fees.

The index tracks the performance of small-cap companies in 22 developed countries (excluding Australia). They include the United States, Canada, Japan, and Europe.

Its top three holdings are Carvana Co (NYSE: CVNA), Interactive Brokers Group, Inc. (NASDAQ: IBKR), and Nutanix Inc (NASDAQ: NTNX). The management fee is 0.32%.

The post Here's why small-cap ASX ETFs are on the rise appeared first on The Motley Fool Australia.

We take a look at 4 small-cap ETFs designed to give exposure to this market segment.

Australian-focused ETFs 

The Vanguard MSCI Australian Small Companies Index ETF (ASX: VSO) provides broadly diversified exposure to small companies listed on the ASX. The ETF tracks the MSCI Australian Shares Small Cap Index, before fees, expenses and tax. The fund returned 18.27% in the year to 30 November. Management fees are 0.30% per annum and distributions are made twice yearly.

The ETF held 164 securities at 31 October. Top holdings include Evolution Mining Ltd (ASX: EVN), Northern Star Resources Ltd (ASX: NST), Atlas Arteria Group (ASX: ALX), Charter Hall Group (ASX: CHC), Afterpay Ltd (ASX: APT), Downer EDI Limited (ASX: DOW), Qube Holdings Ltd (ASX: QUB), JB Hi Fi Limited (ASX: JBH), Iluka Resources Limited (ASX: ILU), and ALS Ltd (ASX: ALQ).

The Betashares Australian Ex-20 Portfolio Diversifier ETF (ASX: EX20) provides exposure to approximately 180 stocks listed on the ASX ranked in market capitalisation from 21 to 200. This effectively excludes stocks to which many investors are already exposed. The fund returned 18.74% in the year to 31 October.

Management fees are 0.20% per annum and costs are capped at 0.05% per annum. Distributions are made twice yearly. Top holdings include Unibail-Rodamco-Westfield (ASX: URW) (3.2%), Aristocrat Leisure Limited (ASX: ALL) (3.0%), Coles Group Ltd (ASX: COL) (2.5%), Sydney Airport Holdings Pty Ltd (ASX: SYD) (2.4%), Santos Ltd (ASX: STO) (2.2%), Fortescue Metals Group Limited (ASX: FMG) (2.1%), Origin Energy Ltd (ASX: ORG) (2.0%), Sonic Healthcare Limited (ASX: SHL) (2.0%), AGL Energy Limited (ASX: AGL) (1.9%) and Insurance Australia Group (ASX: IAG) (1.8%).

United States-focused ETFs

The iShares S&P Small-Cap ETF (ASX: IJR) provides exposure to more than 600 small US companies. The ETF tracks the S&P Small Cap 600 Index before fees and expenses. Returns for the year to 30 November were 12.79%. Management fees are 0.07% and distributions are made quarterly.

Top holdings include cash (1.51%), Arrowhead Pharmaceuticals (0.83%), Medicines (0.82%), Darling Ingredients (0.52%), LHC Group (0.51%), Topbuild Corp (0.49%), Glacier Bancorp (0.49%), Cabot Microelectronics (0.49%), Neogen Corp (0.47%), and Lithia Motors (0.46%).

The iShares S&P Mid-Cap ETF (ASX: IJH) provides exposure to mid-size US companies. The ETF tracks the S&P Mid-Cap 400 before fees and expenses. Returns were 11.82% in the year to 31 October. Management fees are 0.07% and distributions are made quarterly.

Tops holdings at the end of October included Zebra Technologies (0.74%), Teledyne Technologies (0.69%), Steris (0.69%), Old Dominion Freight Line (0.67%), Alleghany Corp (0.64%), Dominos Pizza (0.64%), Camden Property Trust REIT (0.63%), West Pharmaceutical Services (0.61%), Teradyne (0.60%) and Tyler Technologies (0.59%).

Foolish takeaway

Small-cap shares can be under-recognised, and thus undervalued, by the market. The potential for exponential returns can be an attraction, but come with a degree of risk. Diversification is an important part of managing this risk.

The post 4 ASX ETFs for small-cap investors appeared first on The Motley Fool Australia.