Diversification wise, does it make sense to buy a small cap ETF of the US market when I already have a large cap ETF of the same market? I am asking this question thinking about a possible recession, if the US market gets hit, they will both get hit I guess, right?

1 Answer 1


Yes, you should own a diverse mix of company sizes to be well diversified. While both will probably get hit in a recession, different economies suit different sized companies very differently in many cases, and this diversity positions you best to not only not miss out in cases where small companies do better out of recessions than large, but also in environments where small companies rate of growth is larger in bull markets.

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