Small-Cap Exposure at Lower Cost or Greater Liquidity? SPSM vs. IJR
Key Points
IJR commands a much larger asset base than SPSM
Both ETFs offer similar sector exposures and nearly identical risk profiles
SPSM charges a lower expense ratio and has a marginally higher dividend yield
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State Street SPDR Portfolio S&P 600 Small Cap ETF (NYSEMKT:SPSM) and iShares Core S&P Small-Cap ETF (NYSEMKT:IJR) both track the S&P SmallCap 600 Index, but differ in fund size, expense ratio, and yield, with IJR being significantly larger and SPSM offering lower costs and a marginally higher payout.
This comparison looks at two of the most popular U.S. small-cap ETFs: SPSM from State Street and IJR from iShares. Both aim to provide diversified exposure to the S&P SmallCap 600 Index, but differences in cost, liquidity, and fund scale may appeal to different types of investors.
Snapshot (cost & size)
| Metric | SPSM | IJR |
|---|---|---|
| Issuer | SPDR | IShares |
| Expense ratio | 0.03% | 0.06% |
| 1-yr return (as of 2026-03-11) | 18.7% | 18.9% |
| Dividend yield | 1.50% | 1.33% |
| Beta | 1.20 | 1.20 |
| AUM | $14.69 billion | $92.2 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-yr return represents total return over the trailing 12 months.
SPSM is more affordable, charging only 0.03% annually compared to IJR’s 0.06%. SPSM also offers a slightly higher dividend yield, which may appeal to yield-focused investors.
Performance & risk comparison
| Metric | SPSM | IJR |
|---|---|---|
| Max drawdown (5 y) | -27.94% | -28.02% |
| Growth of $1,000 over 5 years | $1,085 | $1,083 |
What's inside
IJR holds 649 stocks with its largest sector weights in Financial Services (17%), Industrials (16%), and Consumer Cyclical (15%). Top holdings include Solstice Advanced Materials Inc (NASDAQ:SOLS), Interdigital Inc (NASDAQ:IDCC), and Moog Inc Class A (MOG-A), each representing less than 1% of assets. The fund has been operating for over 25 years and has strong liquidity, with $92.2 billion in assets under management (AUM).
SPSM, by contrast, holds 607 stocks and mirrors IJR’s sector allocations, focusing on Financial Services, Industrials, and Consumer Cyclical. Its leading holdings are Solstice Adv Materials Inc (NASDAQ:SOLS), Interdigital Inc (NASDAQ:IDCC), and Caretrust REIT Inc (NYSE:CTRE), also each under 1% of assets. Both ETFs avoid leverage, currency hedging, or other structural quirks, and track nearly the same index composition.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
When two ETFs track the same small-cap index, the key consideration is how you access that exposure. Both funds follow the S&P SmallCap 600 Index, hold similar companies, and are expected to deliver comparable results over time.
The main differences between the two ETFs are cost, size, and how easily you can trade the funds. SPSM has lower fees, which can help long-term investors keep costs down. IJR is much bigger and trades more often, so it usually has smaller price gaps and is easier to buy or sell, especially for large trades. There are some differences in yield, but they are small and probably won't affect your returns much.
For investors, the choice is between two approaches to the same strategy. SPSM is suitable for investors who are seeking the lowest-cost S&P 600 exposure with a long-term horizon. IJR is preferable for investors prioritizing fund size, liquidity, and trading efficiency. Since both provide similar exposure, the best option depends on your investment priorities.
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Eric Trie has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends iShares Core S&P Small-Cap ETF. The Motley Fool has a disclosure policy.
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