Mutual fund managers allocate too much capital to low-quality stocks and Small Cap Blend ETFs hold poor quality stocks.

Finding the best ETFs is an increasingly difficult task in a world with so many from which to choose.

We argued at the beginning of the year that small caps were overvalued compared to large caps and would underperform this year. That prediction has been right so far as the Russell 2000 is down 4% while the S&P 500 is up 4% in 2014. We don’t see this divergence ending any time soon.