For investors seeking momentum, SPDR Dow Jones Industrial Average ETF (DIA) is probably on the radar. The fund just hit a 52-week high and is up 23% from its 52-week low price of $366.32 per share. But are more gains in store for this ETF? Let’s take a quick look at the fund and the near-term outlook on it to get a better idea of where it might be headed:DIA in FocusSPDR Dow Jones Industrial Average ETF is one of the largest and most popular ETFs in the large-cap space. It holds 30 blue-chip stocks, with ke ...

Core Insights - Small-cap stocks present a significant growth potential compared to large-cap stocks, as many large-cap stocks began as small caps [1] - Falling interest rates are expected to benefit small-cap stocks disproportionately due to their higher reliance on debt, potentially lowering borrowing costs and attracting investment into more speculative companies [2] - Investing in small-cap stocks can be challenging, making index funds like the Vanguard Russell 2000 ETF a viable option for exposure [3] Valuation Analysis - There is a notable valuation gap between small caps and large caps, with small caps trading at their lowest price-to-book valuations relative to large caps since the late 1990s [5] - As of the current analysis, the average stock in the Russell 2000 trades at 1.8 times book value, while the average S&P 500 component trades at 5.0 times book value, indicating a significant disparity [6] - The earnings growth of large caps, particularly in the tech sector, has not been sufficient to justify the large valuation gap [6] Investment Strategy - Accumulating shares of the Vanguard Russell 2000 ETF is a strategy being employed to capitalize on the potential for small-cap outperformance in a falling interest rate environment [7]

Group 1 - The Avantis US Large Cap Value ETF (NYSEARCA: AVLV) was launched on September 21, 2021, and is managed by American Century Investment Management Inc. [1] - The ETF provides exposure to large-cap stocks that exhibit value characteristics through a factor-based systematic strategy [1]