While not completely striking out on these previous recommendations, I’ll take the momentum from those selections and continue my quest to uncover the hidden gems across the ever-growing ETF ecosystem. Let’s take a look at three more ETFs that have been overlooked, undervalued, or undiscovered that investors may want to take a second look at.

This ETF is constructed by one of Legg Mason’s underlying asset management firms, Royce & Associates. Royce is a top small-cap manager that has carried over its style of active management in mutual funds and closed-end funds to an index-based approach for use in an ETF. Royce approaches small-caps with a value mandate, while maintaining a careful attention to quality — for good reason. This approach (value and quality in small-caps) has been touted by academia and shown in practice by Royce’s 40 years of investing experience for its strong returns.

How well does it work? Well, we all know we should take historical index performance with several grains of salt and that past performance is not indicative of future results — but WOW, the index history is incredible!

In fact, by my calculations, since 1999 (near the index’s inception) returns would have outperformed every single mutual fund regardless of category (those still trading today, i.e., more than 4,000 funds), except one. Index history or live performance, any time you quadruple the Russell 2000 and sextuple the S&P 500, you are probably doing something right. This is a relatively new and small fund, but it has decades of expertise and support behind it.

Keeping with the small-cap theme, the next ETF you should keep an eye on is the Oppenheimer Russell 2000 Dynamic Multifactor ETF (OMFS). Also a new and smaller fund, this product is one of only a few ETFs in the marketplace that implements a “dynamic” approach to factors (and the only one to do so in the small-cap space). OMFS rotates between momentum, value, quality, size, and low volatility within the small-cap (Russell 2000) universe. The fund does this by utilizing Oppenheimer’s proprietary economic-regime approach to determine business cycle location (recovery, expansion, slowdown, and contraction) and then allocating accordingly amongst factors. Per regime, at least two factors, if not three, are allocated to.

Factors in small-cap stocks have historically provided excess returns that are multiples of what has been observed in the large-cap space. Even with some expected erosion in those factor returns going forward, having a multifactor allocation as a starting point for this portfolio is a definite plus. Besides, there are few tools that provide access to factors in the small-cap area, and a multifactor fund may be the most efficient option, as long as we pay close attention to trading costs and taxes. The factor rotation process used in the product has historically (pre-inception) limited drawdowns and provided similar, if not better, returns on the upside. Of course it has. But so far, in a little less than a year since inception, the product’s performance has been largely in line with expectations, limiting downside and maintaining upside.

I had to throw in at least one deep-value play. We believe one of the best opportunities, with regards to valuations and portfolio construction (due to zero correlations with equities and bonds), is in agricultural commodities. In my view, the ETF space for agricultural commodities is underserved, but then again assets don’t become deep value because everyone wants to buy them. TAGS owns the other four Teucrium agriculture ETFs (corn, wheat, sugar, and soybeans) in roughly equal proportions. Those four commodities are at least a full standard deviation below their long-term real prices, implying double-digit annualized returns if they return to their median level (and it ever stops raining in the Midwest). The broad agriculture index is at its lowest inflation-adjusted price . . . ever. Where else can you find double-digit return potential nowadays?

If you are interested in TAGS, be sure to use a limit order (do this with any ETF) or call a broker and know that due to its structure it will produce a K-1 tax form. Despite the recent “movement” toward 1940-Act commodity products (usually through a Cayman Islands subsidiary), we haven’t seen issuance in the agriculture space yet. Scantly traded exchange-traded notes are currently the only way to get this K-1-free commodity access, which is quite interesting to me since there are probably a lot of people sitting on losses that they could harvest in the $500 million Invesco DB Agriculture ETF (DBA). Anyway, off my soap box.

The ETF space is growing, changing, and evolving. It takes careful attention to discover all of the potential ETF tools that can help your portfolios. While some of these ETFs may be new, untested, and undiscovered — they are worth a second look.