June has started as a fine month for small-cap investors, if not for everyone else. The Russell 2000 index of small-cap stocks is up 1.2 percent this month through early trading Wednesday, while the large-cap focused S & P 500 Is down almost 1 percent. The mega-cap Dow Jones industrial average is off 1.3 percent in June. Small-cap stocks have gained ground despite concerns that rising interest rates will make all stocks less attractive. Read More 'Dow Theory' doubters need to look at the data Investors seem to be recognizing that they can't fight the Federal Reserve if it decides to increase interest rates, but they can maneuver around the threat by focusing on what will benefit, especially as the U.S. dollar rallies on the expected central bank action. Foreign sales account for more than 40 percent of total revenue for S & P 500 companies so large caps are going to continue to see results hurt if the dollar resumes strengthening. And in turn, small caps will gain interest because of their domestic focus. Three of the 10 ETFs with the largest inflows last week track small- and mid-cap stock indexes, just the sort of indexes that should be insulated from the impact of a stronger dollar. Since we want small-cap exposure and want to avoid exchange rate exposure, iShares Russell 2000 ETF (IWM) is the way to go. Not only does "IWM" provide exposure to 2,000 small-cap stocks, it does so at very low cost (the annual management fee is just 0.20 percent). And the fund manages a difficult annual rebalance of the underlying Russell 2000 index particularly well. So well that in 2014, "IWM" outperformed the underlying Russell 2000 Total Return Index, even after the fund's management fees and trading expenses. There's nothing like knowing what you're getting and with this ETF you're getting small-cap exposure and less impact from foreign currency fluctuations. Now you just need the American economy to perform. Scott Nations is president and chief investment officer of NationsShares as well as a CNBC contributor. You can follow Scott on Twitter @ScottNations Disclosure: None
