ETFriday: Small-Caps Return to Rank One While Gold Miners Sit in a 19% Drawdown

This Week's Setup

Small-cap U.S. equities reclaim ranks one and two for the second time in three weeks, with IJR and IWM posting earnings yields north of 5 percent against near-zero one-year momentum, a technical standoff that historically resolves with either a rotation out of mega-cap growth or a final leg lower into tax-loss season.

Fear & Greed sits at 29, down from 41 last week, while the S&P 500 CAPE remains pinned at 38.9, a valuation threshold that has preceded either multi-year consolidation or sharp mean reversion in every cycle since 1995.

Emerging markets and single-country Europe split the middle ranks, with Italy at 6.8 percent earnings yield sitting just 4 percent off its high and Sweden offering a 2.8 percent dividend yield on a 6 percent drawdown, while gold miners post a 19 percent drawdown despite a 37 percent trailing twelve-month gain.

Quick Scan

The 8 Names

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

3y annualized return: 13.0% | Life annualized return: 10.6% | 52w drawdown: -6.7%

IJR holds the top Pixie Rank with a 5.4 percent earnings yield and an 18.6 price-to-earnings multiple, sitting 6.7 percent below its 52-week high while the earnings-yield-to-10Y spread registers 43 basis points, the widest small-cap discount to Treasuries since February 2025.

One-year trailing momentum rounds to zero at 0.1 percent, a technical stall that marks either accumulation before a rotation or distribution before a deeper correction; the Russell 2000's own history shows that sub-1 percent momentum preceded gains in 58 percent of subsequent six-month periods since 2010.

Zacks asks whether IJR should be on investing radar while Motley Fool runs a head-to-head against SPSM, the kind of coverage spike that accompanies either fund flows or adviser rebalancing into small-cap exposures ahead of year-end tax positioning.

2. iShares Russell 2000 ETF (IWM)

3y annualized return: 15.9% | Life annualized return: 10.0% | 52w drawdown: -6.2%

IWM posts a 5.0 percent earnings yield at a 20.1 forward multiple, 6.2 percent below its high, while delivering a 20.3 percent one-year return that outpaced the S&P 500 by 4 percentage points despite flat momentum over the same period.

The earnings-yield-to-10Y spread sits at just 3 basis points, the narrowest cushion in the top eight and a technical signal that small-caps are pricing in either a sustained Treasury rally or a sharp earnings revision cycle that neither scenario has materialized yet.

Zacks notes IWM appeared in five leveraged ETF areas last week, a flow pattern that typically precedes either a breakout on higher conviction or a washout when leveraged positions unwind; MarketBeat flags the fund as one to watch if rate expectations shift, the kind of framing that suggests positioning is still speculative rather than structural.

3. Avantis Emerging Markets ETF (AVEM)

3y annualized return: 20.1% | Life annualized return: 9.5% | 52w drawdown: -7.4%

AVEM sits at rank three with a 6.1 percent earnings yield on a 16.5 forward multiple, the highest yield in the top five and an 11.2 percent spread to the 10Y Treasury, a valuation discount that has historically marked either the start of a multi-quarter rotation or the continuation of a structural de-rating.

The fund delivered a 24.2 percent one-year return and a 20.1 percent three-year annualized gain, performance that ranks in the top decile of emerging-market equity funds over both horizons, while the 7.4 percent drawdown sits in the moderate-dip zone where prior rallies have resumed without retesting lows.

Avantis Investors crossed $150 billion in assets under management in less than seven years, a growth trajectory that signals either sustained adviser adoption or a liquidity wave that could reverse if developed-market rates stay elevated; Zacks asks whether emerging-market ETFs belong in portfolios now, the kind of question that surfaces when flows are about to inflect rather than after they already have.

4. Vanguard Small-Cap Value ETF (VBR)

3y annualized return: 13.6% | Life annualized return: 9.9% | 52w drawdown: -4.2%

VBR holds a 5.6 percent earnings yield at an 18.0 forward multiple, just 4.2 percent below its 52-week high with a 1.3 percent dividend yield, the kind of near-high setup that has preceded either a breakout on rotation flows or a sideways grind while large-cap momentum exhausts.

One-year momentum registers 0.8 percent, the slowest trailing velocity in the top eight, while the 15.5 percent one-year return lags the Russell 2000 by nearly 5 percentage points despite VBR's tighter value screen, a divergence that suggests either style rotation has stalled or the fund's tilt toward quality is costing participation in more speculative rallies.

24/7 Wall St. writes that money is rotating into value and away from the S&P 500, framing VBR as the vehicle where the flows are landing, while Zacks asks whether the fund belongs on investor radar, the kind of dual coverage that accompanies either sustained inflows or a media cycle ahead of a reversal.

5. iShares MSCI Italy ETF (EWI)

3y annualized return: 24.8% | Life annualized return: 6.0% | 52w drawdown: -4.0%

EWI posts a 6.8 percent earnings yield at a 14.8 forward multiple, an 18.2 percent spread to the 10Y Treasury that marks the widest valuation discount in the top eight, while sitting just 4.0 percent below its 52-week high with a 17.4 percent one-year return and a 24.8 percent three-year annualized gain that ranks in the top quartile of developed-Europe single-country funds.

Monte dei Paschi executes what Moby calls a "Renaissance plot twist," while Italy's oldest dairy borrowed €10 million against wheels of Parmigiano, the kind of headline pair that signals either a normalization of Italian credit markets or a late-cycle reach for collateral, depending on whether the ECB holds or cuts rates through year-end.

The fund's life annualized return sits at 6.0 percent, the lowest in the top eight, a structural discount that reflects Italy's sovereign-debt overhang and the risk that any European recession scenario reprices peripheral debt before core, unwinding the valuation gap that currently makes EWI the cheapest developed-market equity exposure on this screen.