After lagging the performance of large-cap stocks last year, the major small-cap indexes surged ahead of the S&P 500 and other large-cap benchmarks during the first months of 2015. One reason, say analysts, is the earnings disappointments among export-heavy large caps hurt by the dollar’s strong run.

With the dollar up 25% or more against the euro and other currencies over the past year, large U.S. companies that do a lot of business overseas have seen earnings decline as it becomes difficult to price exports competitively and as sales in weaker currencies translate into fewer dollars back home. The currency headwind is a major reason many S&P 500 companies, which derive about 40% of sales from overseas, reported a year-over-year drop in first-quarter earnings.

Smaller companies don’t face currency or geopolitical issues to the same extent, since they conduct most of their business in the U.S. And it’s often possible to find smaller companies that do pretty much the same thing larger ones do with little or no international exposure. A stronger dollar adds to the other classic advantages of small caps: their better long-term returns and their potential for earnings growth that’s faster than what large caps enjoy.

On the other hand, small-cap stocks can lag large caps for long periods, especially when market uncertainty draws investors to more predictable blue chips. The stocks of smaller companies are typically more volatile than those of larger ones, and their earnings are less predictable. After several years of mostly strong performance, small caps are selling at a slightly higher price-earnings multiple than large caps right now, which means they are no bargain.

Nonetheless, the recent rebound for the asset class is a good reason to review the diverse members of this 59-member ETF universe, where even small differences in index composition can make a dent in performance. For example, two different Vanguard ETFs, one following the Russell 2000 and the other the S&P SmallCap 600 index, were up 15.53% and 13.75%, respectively, over the year ending April 15. Over five and 10-year periods, however, the latter index outperformed. Growth versus value is another issue worth examining, since the performance and valuation gap between the two has been particularly wide over the last year.

Broad-Based
For most ETF investors, the route to investing in the small-cap universe is through a broad-based ETF that blends growth and value stocks. At over $30 billion in assets, the iShares Russell 2000 fund (IWM, which has an expense ratio of 0.20%) is the largest ETF in the category and is nearly twice as large as its nearest competitor. With millions of shares traded each day, it is highly liquid and does a good job of tracking the approximately 2,000 small and micro-cap stocks it covers. It has a weighted average market cap of $2.1 billion. Two smaller ETFs also track the Russell 2000: the Vanguard Russell 2000 fund (VTWO, which has an expense ratio of 0.15%) and the SPDR Russell 2000 fund (TWOK, whose expense ratio is 0.12%).

While the Russell 2000 is considered the marquee index for small-cap stocks, Morningstar analyst Michael Rawson argues that its popularity makes the ETFs that follow it vulnerable to “front-running” by arbitrageurs. “When these arbitragers trade ahead of the index, they can hurt the index’s performance by pushing up the prices of the stocks that it is set to add and by depressing the prices of the stocks that it is slated to trim,” Rawson wrote in a recent report. “Investors may be better served in an index fund that tracks a less popular small-cap index, such as the S&P SmallCap 600 index or CRSP U.S. Small Cap Index.”

Several ETFs are available for investors who share that concern. At over $16 billion in assets, the iShares Core S&P Small Cap fund (IJR, whose expense ratio is 0.12%) is the second-largest ETF in the small-cap group. It tracks the S&P SmallCap 600 index, which covers about 4% of the total U.S. stock market. It has an average market cap of $1.77 billion and a slightly lower standard deviation than the Russell 2000. Two other ETFs, the S&P Small Cap 600 fund (SLY, which has an expense ratio of 0.15%) and the Vanguard S&P Small Cap 600 fund (VIOO, which has an expense ratio of 0.15%) track the same index but are smaller and have wider trading spreads.

The Schwab U.S. Small Cap fund (SCHA) holds the title of least expensive small-cap ETF (its expense ratio is 0.08%). This one tracks the Dow Jones U.S. Small-Cap Total Stock Market Index, which consists of the smallest 1,750 of the 2,500 largest publicly traded companies. At $2.9 billion in assets, it is highly liquid and has a razor-thin average trading spread of 0.07%. A close second in the race to cheapness is the Vanguard Small Cap fund (VB, which has an expense ratio of 0.09%). At $11.4 billion in assets, it is the third-largest small-cap ETF fund, and it tracks the CRSP Small Cap Index. It skews more toward mid-caps than many of its competitors, which is reflected in its companies’ weighted average market cap of $3.74 billion.

Growth
Big performance differences can emerge between small-cap growth and value ETFs, and in the last year, growth stocks have taken a decisive lead. As of April 15, the iShares Russell 2000 Growth fund (IWO, which has an expense ratio of 0.25%) was up 22% for one year, while the iShares Russell 2000 Value fund was up 9.07% (the value fund, IWN, has an expense ratio of 0.25%). Growth stocks are also more richly valued in this area; the growth component of the Russell Small Cap index sports a price-to-earnings ratio of 26.3, while the value side’s ratio is 18.0.

The IWO fund is the largest ETF in the growth group, with $7.4 billion in assets. It emphasizes information technology and health-care stocks, which account for about half of its assets, whereas these sectors make up only about one-third of the broad Russell 2000 index. The financials in this index weigh in at a mere 7.4%, whereas they represent 23% of the bogey index’s assets and 40% of the index’s value names. About 10% of the IWO portfolio is in micro-caps, which gives it more of a growth tilt than some of its competitors have, and it has a weighted average market cap of $2.38 billion.

The $4.6 billion Vanguard Small Cap Growth fund (VBK, which has an expense ratio of 0.09%) is the second-largest small-cap ETF emphasizing growth stocks. It tracks the CRSP US Small Cap Growth Index, which has greater exposure to mid-cap stocks than the Russell 2000 Small Cap Growth Index, and its weighted average market cap is $3.92 billion.

The iShares S&P 600 Small Cap Growth fund (IJT, whose expense ratio is 0.25%) is the largest ETF to track this S&P index. The $3.5 billion fund has a 24% stake in financials, which is much higher than that of most competitors, and its valuation measures such as price-to-earnings and price-to-book ratios are somewhat lower.

Value
Although small-cap growth stocks have shot ahead recently, small-cap value stocks hold an edge over the long-term by a wide margin. From its inception in 1978 through 2014, the Russell 2000 Value Index has outpaced the Russell 2000 Growth Index by an average of 3.4% a year. But small-cap value stocks can also lag growth over long periods, as they have for much of the last decade. Their businesses are often unpredictable, and despite a comforting label, the standard deviation of the value side of the Russell index over the last five years isn’t that much lower than it is on the growth side.

The funds in this space search for value in ways different enough to produce different market cap and sector tilts. With $6.5 billion in assets, the iShares Russell 2000 Value fund is the largest ETF that targets the cheaper side of the small-cap market. Besides financials, in which it has the massive 40% stake mentioned before, the ETF’s top sectors include industrials (12.7%) and consumer discretionary names (12.08%). The fund’s expense ratio is higher than that of some competitors, but it gets high marks for a razor-thin trading spread of just 0.01%. It has a weighted average market cap of $1.8 billion.

Vanguard offers small-cap value exposure through the $5.6 billion Vanguard Small Cap Value fund (VBR, whose expense ratio is 0.09%). This fund follows the CRSP U.S. Small Cap Value Index. It leans more toward mid-caps than the iShares value offering, and it has a weighted average market cap of $3.59 billion. It has a lower stake in financials (29.3%), but a bigger position in industrials (20.7%).

Of the three ETFs that track the S&P 600 Value Index, the iShares S&P Small Cap Value fund (IJS, whose expense ratio is 0.25%) is the most liquid. According to ETF.com, the fund “tilts toward small, which makes it look growthier,” and its dividend yield is lower than that of other small-cap offerings. It has a weighted average market capitalization of $1.5 billion.

The $1.3 billion WisdomTree Small Cap Dividend fund (DES, which has an expense ratio of 0.38%) has a value tilt, even though that description doesn’t appear in its name. Its 30-day SEC yield of 2.7% is about a percentage point higher than that of competing small-cap value ETFs. Financials are the largest sector (24%) followed by industrials (16%) and consumer discretionary (16%).