Why small-cap ETFs are having their moment in the spotlight

Watch on YouTube ↗  |  August 03, 2026 at 17:36  |  2:01  |  CNBC
Speakers
Todd Rosenbluth — Head of Research, TMX VettaFI
Dominic Chu — Senior Markets Correspondent, CNBC

Summary

Small-cap ETFs are having a strong moment in 2026 as the market broadens out beyond mega-cap tech names. Todd Rosenbluth of TMX VettaFi highlights that the S&P Small Cap Index is beating large caps by over 1000 basis points, with free cash flow serving as a key performance differentiator. The VictoryShares Small Cap Free Cash Flow ETF (SFLO) has benefited from this quality tilt, driven by energy, industrials, and tech stocks.

  • Small-cap indices significantly outperform large-cap peers in 2026.
  • Market broadening beyond tech, led by industrials and energy.
  • S&P Small Cap Index beats S&P Large Cap Index by over 1000 bps YTD.
  • Free cash flow is the top metric separating winning small caps.
  • VictoryShares Small Cap Free Cash Flow ETF (SFLO) outpaces the broad small-cap index.
  • SFLO's recent outperformance helped by energy, industrials, and technology names.
  • Quality/growth-at-a-reasonable-price theme gaining traction in small caps.
  • Discussion continued at etf.cnbc.com with additional guests.
Ideas
Todd Rosenbluth Head of Research, TMX VettaFI 0:43
Small caps strongly outpacing large caps.
The market is broadening out from mega-cap tech leadership, with small caps significantly outperforming. The S&P Small Cap Index has beaten the S&P Large Cap Index by over 1000 basis points this year, driven by strength in industrials and energy names.
IWM MED
Todd Rosenbluth Head of Research, TMX VettaFI 1:20
Free cash flow small caps outperform.
Higher-quality small-cap companies with strong free cash flow are outperforming the broader small-cap index. The VictoryShares Small Cap Free Cash Flow ETF (SFLO) has been helped in the past month by energy, industrials, and technology stocks, showing free cash flow is a key differentiating factor this year and in July.
SFLO HIGH
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This CNBC video, published August 03, 2026, features Todd Rosenbluth discussing IWM, SFLO. 2 trade ideas extracted by AI with direction and confidence scoring.

Speakers: Todd Rosenbluth  · Tickers: IWM, SFLO