Five Small-Cap ETFs For The Second Half

The market's ascent in 2011 has been fueled primarily by large-caps as investors have scaled back their small-cap exposure, but that doesn't mean small-caps won't have their day in the sun again. Even with today's decline, the Russell 2000 is within striking distance of all-time highs and this is an index to watch because it is an excellent gauge of money manage sentiment. If the smart money is betting on further gains for equities, chances are they'll put some of their available cash to work in the Russell 2000, fueling more upside for small-caps. For those that are willing to lay bets that small-caps will once again profit as we move into the second half of the year, the following ETFs could prove to be solid ideas. 1) WisdomTree Emerging Markets SmallCap Dividend

: If DGS repeats its performance from the second half of 2010 this year, investors will be quite pleased. On June 1, 2010, DGS was trading around $40. By early November, the ETF was above $54. Past performance is no guarantee of future results, but 31% combined exposure to Taiwan and South Korea should serve this ETF well going forward. 2) Market Vectors Russia Small-Cap ETF

: Not even a month old, RSXJ has already acquired $2.5 million in assets under management, but what makes this ETF a small-cap fund worth watching in the second half is the country it tracks. Russia has been THE BRIC darling this year. If that trend continues, RSXJ could end 2011 as one of the year's best new ETFs. 3) PowerShares S&P Consumer Staples Portfolio

: There is playing defense to the point of being boring and there is playing defense with a pulse. PSCC is definitely in the latter category. The ETF is chock full of more exciting staples stocks, but that doesn't mean a bet on unfamiliar names. You've heard of Casey's General Stores

and Boston Beer

, right? 4) Market Vectors Germany Small-Cap ETF

: Now a month old, GERJ has accumulated $2.7 million in AUM in that time. Not too shabby at all. If developed markets continue to be leaders, dial your risk profile up a notch with this ETF that offers exposure to Germany's export-driven economy. 5) iShares MSCI Japan Small Cap Index Fund

: Believe it or not, SCJ may be the riskiest play of this quintet and not because it's a Japan play. The chart shows an ETF that is on fire. After touching $38 post-earthquake, SCJ now trades above $46 and there is nothing in the way of resistance between there and $50. The natural disasters that struck Japan set an already fragile economy back a bit, but as we have seen in the U.S., small-caps are especially potent for an economy that is just awakening from some doldrums. If Japan shows signs of life in the second half, $46 may prove to be cheap for SCJ.