It tracks the Russell Microcap Index and holds roughly 1,000 to 1,800 of the smallest companies by market capitalization in the US market. It is managed on a market-cap-weighted basis, so it reflects the performance of the micro-cap market as a whole.

It suits aggressive investors who want to diversify their portfolios by gaining exposure to the explosive growth potential of micro-cap companies overlooked by conventional indexes.

It is a passively managed (index-tracking) ETF launched by BlackRock (iShares) in 2005.

It tracks an index that includes companies even smaller than those in the Russell 2000 Index, and it replicates micro-cap market performance through representative sampling. Early-stage, venture-like companies in the technology and healthcare sectors make up a relatively large share.

• The largest ETF targeting the US micro-cap market
• Broad holdings that spread out single-stock risk

Assets under management (AUM) stand at $1.2B, and the expense ratio is 0.60% per year.

Compared with small-cap ETFs such as IWM or IJR, it holds far smaller companies, so volatility is higher, but it can offer differentiated opportunities for alpha returns.

It reacts very sensitively to the interest rate environment and risk appetite, and it tends to show greater elasticity than large caps when market-wide liquidity is abundant and the economy is strong.

Capital seeking exposure to this niche market has remained steady, but given the nature of micro-cap stocks, outflows can appear quickly when macroeconomic uncertainty rises.

The high growth potential of early-stage companies is its strength, while extreme price volatility and relatively high management costs are the main considerations.

The IWM, IJR, and VB shown in the table are leading small-cap products, with larger companies and better liquidity than IWC. If you want more aggressive micro-cap exposure, you could compare the value-oriented IWR or the growth-oriented IWY, and assets at the boundary between small-cap and micro-cap indexes can be used in a complementary way. You may also consider FDM, which has a similar character, or the low-fee alternative VTWV.

This is a key checklist to review before investing in IWC. You should fully recognize the high market volatility, management costs, and liquidity risk inherent in micro-cap investing.

Micro-cap companies have low credit ratings and are highly vulnerable to changes in the external environment, so during a recession their risk of bankruptcy or delisting can be higher than that of large caps.

It is suitable as part of the portfolio of an aggressive investor pursuing high risk and high returns. However, rather than holding it as a standalone asset, a strategy of adjusting its weight alongside a large-cap core holding is recommended.