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Wednesday's Bonus Article Prepare for the January Effect With These 3 Small-Cap ETFsAuthor: Nathan Reiff. Originally Published: 12/26/2025. 
Article Highlights - In the new year, small-cap names may be poised to take off based on seasonal investing patterns.
- Two ETFs to consider for broad small-cap exposure are the DISV and the ISVL.
- As a counterbalance to these funds, the DFAU is an often-overlooked broad-based U.S. equities ETF.
Investors do not universally agree on the January Effect, but the theory holds that small-cap stocks can rise early in the year. The idea is that investors who sold losing positions late in the prior year to offset capital gains may repurchase shares in January, giving those stocks a boost. For investors focused on small-cap stocks, historical January trends may be a welcome bonus. Small caps can offer the potential for outsized returns, though they are typically riskier than larger, established firms. Just like Microsoft and Adobe rode the software wave in Web 1.0, RAD Intel is riding the AI software wave in 2025. Their product helps brands instantly find the right audience and message using AI – solving the #1 waste in marketing: misfired ad spend.
Already trusted by a who's-who of Fortune 1000 brands and leading global agencies – with recurring seven-figure partnerships in place. With a Nasdaq ticker reserved, $RADI, it's early – but very real. $0.85 Won't Last – Secure Your Shares Now. Small-cap exchange-traded funds (ETFs) provide diversified exposure to many of these names and can help mitigate single-stock risk. As the new year begins, some investors shift toward small-cap funds to try to capture potential momentum. Below are three widely followed ETFs that offer "small-cap exposure" from different angles. DISV: Active International Small-Cap Value Exposure, But a Higher Fee The Dimensional International Small Cap Value ETF (BATS: DISV) targets non-U.S. small-cap stocks in developed markets that managers assess as relatively inexpensive. It is actively managed to remain responsive to market shifts, limit sector bias and maintain tighter portfolio control. Investors pay a premium for that active management: DISV carries an expense ratio of 0.42%, higher than many index-linked small-cap alternatives. For the fee, investors gain access to a curated portfolio of roughly 1,500 small-cap names from around the world. The portfolio is broadly diversified, though the top 50 positions account for about a quarter of assets. Some investors may accept the higher expense ratio given DISV's recent returns: the fund has returned nearly 47% year-to-date (YTD), well ahead of the S&P 500 and inexpensive small-cap funds such as the iShares Core S&P Small-Cap ETF (NYSEARCA: IJR), which is up less than 9% over the same period. ISVL: A Lower-Cost International Small-Cap Value Option, But Has Liquidity Concerns Similar to DISV, the iShares International Developed Small Cap Value Factor ETF (BATS: ISVL) targets developed-market small-cap value firms, excluding companies from the United States and Korea. The fund tilts toward industrials and financials but includes names across other sectors as well. Japan and the U.K. receive the largest country allocations. ISVL's holdings are narrower than DISV's—about a third as many positions—with several individual companies representing roughly 1% of the portfolio each. As a passively managed fund, ISVL has a lower expense ratio of 0.31%, making it a more cost-efficient way to gain exposure to international developed small caps. Performance has been strong: ISVL returned nearly 43% over the last year. Investors should note, however, its relatively small assets under management (AUM) and trading volume, which could raise liquidity concerns. DFAU: A Small-Cap Tilt With Broad U.S. Equity Exposure The largest and most heavily traded ETF on this list is the Dimensional US Core Equity Market ETF (NYSEARCA: DFAU). At a 0.12% expense ratio, it is also the least expensive fund here. While DFAU does not explicitly target small-cap stocks, it tilts toward U.S. companies with smaller market capitalizations, lower relative prices and higher profitability compared with the broader U.S. market. With roughly 2,300 holdings, DFAU offers broad U.S. equity exposure and can serve as a complement to more concentrated small-cap funds. Its active management allows the fund to adjust allocations as market conditions change. The ETF's performance has been roughly in line with the S&P 500 in 2025.
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