While the large cap and tech stocks are grabbing headlines, small cap stocks seem to be best positioned this year amid the ongoing tit-for-tat tariff trade war and a booming economy. This is reflected in the measure of optimism among U.S. small-business owners, which touched a record on highest capital spending since 2007 and all-time high hiring.

The latest survey from the National Federation of Independent Business revealed that sentiment index rose 108.8 in August — the highest since tracking began in 1974 — and exceeded the prior high achieved in September 1983.

A combination of favorable factors drove the index higher. The historic tax cuts are benefitting small-cap companies most than their large and mid-cap counterparts. Also, the strong sentiments in the space were backed by an encouraging domestic economic trend. The U.S. economy is currently witnessing the fastest pace of growth in nearly four years, with a nearly two-decade low unemployment rate of 3.9% and an 18-year high consumer confidence rate. As the pint-sized firms are closely tied to the U.S. economy and do not have much exposure to the international market, these generally benefit from an improving American economy.

Additionally, small-cap stocks are well insulated from international headwinds including trade war fears, emerging market troubles and geopolitical tensions. These are considered safe and better plays if any political issue or economic turmoil creeps into the picture. Further, the strength in U.S. dollar, which makes domestic goods more expensive overseas, also supported the small-cap surge.

Given the solid momentum in the space, we have highlighted a few top-ranked ETFs that have outperformed in the past month and could be better plays going forward.

First Trust Small Cap Growth AlphaDEX Fund (FYC – Free Report)

This fund follows the Nasdaq AlphaDEX Small Cap Growth Index, which uses the AlphaDEX methodology to select the stock from the Nasdaq US 700 Small Cap Growth Index. It holds a well-diversified portfolio of 262 stocks, with each accounting for less than 1%. The product has amassed $470.1 million in its asset base and trade in average daily volume of 71,000 shares. The ETF charges 70 bps in annual fees and has risen 4.8% in the past month. It has a Zacks ETF Rank #1 (Strong Buy) with a High risk outlook.