3 Small-Cap ETFs Beating the S&P 500 Right Now That Most Investors Have Never Heard Of

"The Invesco S&P SmallCap Momentum ETF has returned 18.30% year to date and 44.37% over the past year, the strongest performance of the group. It holds just 116 stocks selected from the S&P SmallCap 600 based on price momentum, meaning the fund systematically buys what has already been working and rebalances to stay current."

"The Schwab Fundamental US Small Company ETF has returned 11.90% year to date and 40.58% over the past year. It holds approximately 940 stocks selected and weighted not by market cap, but by fundamental measures including revenue, cash flow, dividends, and buybacks."

"The expense ratio is 0.36% for the Invesco ETF, which focuses heavily on holdings like VIAV, Primoris Services Corporation, and Visat. The bulk of the fund leans into industrials at 18%, technology at 18%, and healthcare at around 15%."

"The beta of 1.19 for the Invesco ETF reflects the higher volatility that comes with momentum-driven concentration. This is a fund that accelerates in trending markets and gives back more in reversals."

Small-cap stocks have been outperforming the S&P 500 through early 2026, with the Russell 2000 climbing as mega-cap dominance weakens. Three small-cap ETFs are noteworthy: the Invesco S&P SmallCap Momentum ETF, the Schwab Fundamental US Small Company ETF, and the State Street SPDR Portfolio S&P 600 Small Cap ETF. The Invesco ETF has the highest return at 18.30% year-to-date, focusing on price momentum. The Schwab ETF emphasizes fundamental measures for stock selection, achieving an 11.90% return year-to-date. These funds are gaining attention as they defy conventional investment strategies.

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