For example, the SPDR Portfolio S&P 600 Small ETF (SPSM) was up 10.9% year-to-date through February 10, ahead of the 8.0% gain for the SPDR S&P 500 ETF (SPY). After a rough 2022, U.S. stocks bounced back in the first six weeks of 2023 amid optimism that cooling inflation will result in a stronger economy and a return to earnings growth. Multi-factor small-cap ETFs can make sense for advisors wanting a more discerning, fundamental approach to gaining exposure to potential up-and-coming companies.