ETFriday: Small-Caps Reclaim Rank One While Gold Miners Sit 17% Below Their High

This Week's Setup

Small-cap U.S. equities claim the top Pixie Rank for the first time since April 2025, with IJR at rank one and IWM at rank two posting earnings yields above 5 percent and one-year trailing momentum near zero—a technical setup that historically precedes either a value rotation or a sector washout.

Japan appears at rank three with currency hedging fully deployed, delivering a 5.5 percent earnings yield and 35.6 percent one-year total return as intervention spending tops $80 billion and manufacturers repatriate record yen profits.

Gold miners sit at rank seven on a 17.4 percent drawdown despite a 41 percent one-year return, the widest gap between momentum and pullback depth on the screen and a signal that physical gold has outrun the equities by double digits this quarter.

Quick Scan

The 8 Names

1. iShares Core S&P Small-Cap ETF (IJR)

3y annualized return: 13.0% | Life annualized return: 10.3% | 52w drawdown: -5.8%

IJR posts a 5.4 percent earnings yield at an 18.6 P/E, the lowest multiple in the small-cap complex this week and 0.5 percent cheaper than IWM on a yield basis. The 5.8 percent drawdown sits in the moderate-dip zone while one-year trailing momentum rounds to zero, a combination that marks either capitulation or the start of a multi-quarter value bid.

Institutional flow data shows IWM winning allocator preference over IJR and VB despite IJR's valuation edge, a positioning skew that leaves this fund under-owned relative to its earnings power. Motley Fool coverage this week frames the SPSM-versus-IJR decision as a choice between factor tilt and cap-weighted exposure, but the spread in P/E is now wider than at any point since 2023.

Small-cap earnings revisions turn negative when the 10Y yield breaks above 4.5 percent, a threshold crossed twice in the past 90 days; if recession fears return before the Fed delivers two cuts, the earnings yield cushion narrows fast.

2. WisdomTree Japan Hedged Equity ETF (DXJ)

3y annualized return: 25.1% | Life annualized return: 11.8% | 52w drawdown: -5.1%

DXJ delivers a 5.5 percent earnings yield at an 18.1 P/E while fully hedging yen exposure, a structure that captured 35.6 percent total return over the past year as the Bank of Japan spent $80 billion in foreign reserves to defend the currency. The yield spread over the 10Y Treasury (no data this week, but historically 50–70 bps) remains positive even after the rally, and the three-year annualized return of 25.1 percent is the highest on the screen.

Japan's Ministry of Finance announced this week that intervention operations will continue through year-end, a policy stance that removes the primary risk to hedged equity returns and extends the runway for exporter margin expansion. Zacks coverage asks whether DXJ remains a strong ETF right now; the answer turns on whether you believe repatriation flows can sustain another 12 months of double-digit returns without a yen reversal.

The 5.1 percent drawdown is mild, but the one-year momentum of 0.14 percent monthly is decelerating from the 2025 peak, and the fund's life annualized return of 11.8 percent lags IJR despite superior recent performance—a hint that long-cycle mean reversion favors domestic small-caps over hedged Japan if the yen stabilizes.

3. iShares Russell 2000 ETF (IWM)

3y annualized return: 15.8% | Life annualized return: 9.7% | 52w drawdown: -5.3%

IWM posts a 5.0 percent earnings yield at a 20.1 P/E, 2.5 turns more expensive than IJR but still cheaper than the S&P 500 on a CAPE basis. The 5.3 percent drawdown and 22.4 percent one-year total return place the fund in the moderate-dip zone with positive trailing momentum, a setup that historically precedes either a breakout above the 52-week high or a deeper correction if macro data disappoints.

Institutional money has favored IWM over IJR and VB in recent months, according to 24/7 Wall St. reporting, a flow pattern that reflects index-hugging and factor-neutral mandates rather than active valuation work. Brent crude's move above $100 per barrel this week pressured small-cap futures pre-bell Wednesday, a reminder that energy-import sensitivity remains embedded in the Russell 2000's cost structure.

The yield spread over the 10Y Treasury is near zero (0.6 bps per the data), the thinnest margin on the screen and a signal that any uptick in risk-free rates erases the earnings-yield advantage immediately.

4. Avantis Emerging Markets ETF (AVEM)

3y annualized return: 20.5% | Life annualized return: 9.7% | 52w drawdown: -6.3%

AVEM delivers a 6.1 percent earnings yield at a 16.5 P/E, the cheapest valuation in the emerging-markets complex and 1.2 percentage points above the S&P 500's trailing yield. The three-year annualized return of 20.5 percent ranks second on the screen, and the 28.3 percent one-year total return reflects exposure to democracy-proxy markets in Latin America and Asia that outperformed China by double digits in 2025.

Avantis announced this week that assets under management crossed $150 billion in less than seven years, a milestone that signals institutional adoption of factor-tilted emerging-markets strategies. Zacks coverage asks whether investors should add EM ETFs now; the setup here is a bet that the yield spread over Treasuries (1.16 percentage points) compensates for political risk and that U.S. dollar strength has peaked.

The 6.3 percent drawdown is the deepest in the moderate-dip cohort, and the fund's life annualized return of 9.7 percent matches IWM despite AVEM's superior three-year performance—a sign that long-cycle compounding in emerging markets lags developed small-caps when currency headwinds persist.

5. iShares MSCI Netherlands ETF (EWN)

3y annualized return: 18.7% | Life annualized return: 9.3% | 52w drawdown: -5.5%

EWN posts a 5.0 percent earnings yield at a 20.2 P/E, matching IWM on yield but offering European exposure at a 5.5 percent drawdown. The 26.3 percent one-year total return and 18.7 percent three-year annualized return reflect a concentrated bet on Dutch multinationals that generate revenue in dollars and euros, a currency mix that delivered alpha when the euro strengthened in 2025.

The yield spread over the 10Y Treasury is near zero (0.2 bps), the second-thinnest margin on the screen and a signal that Netherlands equities are priced for perfection relative to U.S. risk-free rates. The fund's life annualized return of 9.3 percent trails every other name in the top five, a reminder that single-country Europe carries event risk that broad U.S. indexes do not.

Netherlands equity returns are levered to ASML's semiconductor capex cycle, and any slowdown in AI infrastructure spending or export restrictions to China would compress earnings estimates across the portfolio faster than the P/E multiple can adjust.