##  [# IWM: Small-Cap ETF Weighed Down by Economic Uncertainty](/sections/data-dive/iwm-small-cap-etf-weighed-down-economic-uncertainty) 

 

# IWM: Small-Cap ETF Weighed Down by Economic Uncertainty

 

 

Large-cap U.S. stocks have been flirting with correction territory, but small-caps have been staring down something worse: a bear market.



 

 

 

 

 [![sumit](/sites/default/files/styles/author_image_icon/public/2023-03/Sumit_0.png?itok=SO-7S5SH "sumit")](/authors/sumit-roy) 

[By Sumit Roy ](/authors/sumit-roy)

 Apr 02, 2025

 Edited by: David Tony

 

 

 [ + Follow ](/etf/login) 

     Share  <a class="a2a a2a_button_email"> Email </a><a class="a2a a2a_button_linkedin"> LinkedIn </a><a class="a2a a2a_button_facebook"> Facebook </a><a class="a2a a2a_button_x"> X (Twitter) </a> 

 

 

 

 

 

 

 

 

  
            googletag.cmd.push(function() {
                googletag.display('js-dfp-tag-article_page_302x26');
            });
    
    

 

 

  

 



 

 

  Loading 

 

 



 

 

Large-cap U.S. stocks have been flirting with correction territory, but small-caps have been staring down something worse: a bear market.

The S&amp;P 500 briefly dipped more than 10% from its recent highs last month, meeting the definition of a correction. But small-cap stocks, as measured by the [**iShares Russell 2000 ETF (IWM)**](/iwm), fell more than 18% from their peak—dangerously close to the 20% threshold that marks a bear market.

## IWM vs. CALF

Investors have noticed the divergence. IWM has seen $2 billion in outflows year to date, the sixth-largest pullback of any U.S.-listed ETF in 2024, according to etf.com’s [ETF Screener Tool](https://www.etf.com/etfanalytics/etf-screener).

The [**Pacer U.S. Small Cap Cash Cows 100 ETF (CALF)**](/calf), a value-tilted small-cap fund, has also suffered redemptions of $1.9 billion, putting it in the top 10 for outflows this year.

  
![Small caps](/sites/default/files/inline-images/outflows.png)

*Source: ETF Screener Tool*

*Our ETF Screener enables you to refine the ETF universe to find a subset of ETFs that fit any investment goal. Use the search filters on the left-side of the screen results to add criteria to help you find the best ETFs and narrow your search.* [*Give it a try today.*](https://www.etf.com/etfanalytics/etf-screener)

Performance has been equally brutal. CALF was down as much as 25% from its highs in March.

On a year-to-date basis, CALF is down 13%, while IWM has lost around 8%. Both have performed worse than the 3% drop for the [**Vanguard S&amp;P 500 ETF (VOO)**](/voo).

 
            googletag.cmd.push(function() {
                googletag.display('js-dfp-tag-in_article_unit');
            });
    
    

 

 

## What’s Behind The Weakness?

One culprit may be rising concerns about a tariff-induced economic slowdown. Many small-cap firms are domestically focused and more sensitive to economic turbulence in the U.S. In contrast, the mega-cap companies dominating the S&amp;P 500 are flush with cash, have global footprints and are better positioned to weather macroeconomic headwinds.

But small-caps weren’t exactly on fire before tariffs became a worry.

IWM hasn’t set a new all-time closing high since 2021. Unlike large-cap companies—especially the tech giants powering the S&amp;P 500—small-cap firms have seen little to no earnings growth in recent years. Stagnant profits have translated into stagnant returns.

## Small-Cap Comparison

Within the small-cap space, ETF strategies are diverse. IWM tracks the Russell 2000 Index, a broad, market cap-weighted benchmark of U.S. small-cap stocks. Using the etf.com [ETF Comparison Tool](https://www.etf.com/tools/etf-comparison/IWF-vs-CALF), we can see that CALF, by contrast, takes a more selective approach, screening the S&amp;P SmallCap 600 Index for companies with the highest free cash flow yields.  
  
![IWM vs CALF](/sites/default/files/inline-images/iwmvscalf.png)  
*Source: ETF Comparison Tool*

*Comparing ETFs is essential for identifying the right investment that aligns with your risk tolerance, time horizon and financial goals. The ETF Comparison Tool at etf.com eliminates guesswork by offering a clear, side-by-side breakdown of critical metrics.* [*Give it a try today.*](https://www.etf.com/tools/etf-comparison)

That strategy has led to mixed results. Since its launch in 2017, CALF has returned 71% versus 59% for IWM. However, it hasn’t outperformed its own benchmark—the S&amp;P SmallCap 600 Index—which is also tracked by the [**iShares Core S&amp;P Small-Cap ETF (IJR**](/ijr)). Both CALF and IJR are up roughly the same amount since mid-2017.

Whether these funds can bounce back may depend on whether economic growth reaccelerates and whether small-cap earnings can finally start to catch up.



 

 

 [ + Follow ](/etf/login) 

 [ Sumit Roy Senior ETF Analyst ](/authors/sumit-roy) 

 

 

  Sumit Roy is the senior ETF analyst for etf.com and author of (Don't) Invest Like a Pro. He creates a variety of content for the platform, including…   [View Bio](/authors/sumit-roy)

 



 

 


 Related Topics  [Equity](http://www.etf.com/topics/equity) 

 [Small Cap](http://www.etf.com/topics/small-cap) 

 [Large Cap](http://www.etf.com/topics/large-cap) 

 [Russell 2000 Index](http://www.etf.com/topics/russell-2000-index)