Supercharge Your Portfolio With 2 Small-Cap Investments

Plus, the 165 holdings in this ETF give it diversity, as well as tech exposure apart from the biggest players, which are more correlated to U.S. politics and slow international sales.

The ETF’s top holding, FEI Company (NASDAQ:FEIC), produces transmission and scanning electron microscopes for nanoscale applications. Up 53% year to date, FEI reported $251 million in net bookings in the third quarter, the highest in the company’s history.

MAXIMUS, Inc. (NYSE:MMS) provides health and business processing services and also profits from the Affordable Care Act, much like the companies in PSCH. Its 2013 third-quarter revenue increased by 26%, while new orders totaled $413 million. The stock is up 47% this year.

Belden Inc. (NYSE:BDC), a global leader in signal transmission solutions for mission-critical applications, reported third-quarter revenue of $522.5 million, up 12.3% from a year ago.

With average trading volume around 35,500 shares a day and $199 million in assets, PSCT is also a thinly traded ETF expected to trend higher into 2014.

Risks to Consider: Investments that trade thinly — especially small-cap stocks — can be volatile on the up- and downside. Because performance of nearly all small-cap stocks is tied to the domestic scene, they will be the first to succumb if the economy falters.

Action to Take –> Investors with room in their portfolios for speculative ETFs may want to consider a 5% stake in both PSCH and PSCT.

This article was originally written by Karen Canella and posted on StreetAuthority.