Which Is the Better iShares Small-Cap Value ETF, the Morningstar-Indexed ISCV or Russell 2000-Based IWN?
Key Points
The iShares Morningstar Small-Cap Value ETF offers a significantly lower expense ratio and higher dividend yield than the iShares Russell 2000 Value ETF.
The iShares Russell 2000 Value ETF has delivered higher 1-year total returns and maintains a much larger asset base.
Both funds focus on small-capitalization value stocks but differ in their sector weights and specific underlying indexes.
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The iShares Russell 2000 Value ETF (NYSEMKT:IWN) provides massive liquidity and higher recent returns, while the iShares Morningstar Small-Cap Value ETF (NYSEMKT:ISCV) offers a significantly cheaper cost structure and higher trailing yield.
These two exchange-traded funds target the small-cap value segment of the U.S. market, providing exposure to smaller companies that may be underpriced. While IWN follows the widely recognized Russell 2000 Value Index, ISCV provides a more cost-effective alternative using Morningstar's indexing methodology to capture similar market dynamics.
Snapshot (cost & size)
| Metric | ISCV | IWN |
|---|---|---|
| Issuer | iShares | iShares |
| Expense ratio | 0.06% | 0.24% |
| 1-yr return (as of June 3, 2026) | 29.98% | 43.68% |
| Dividend yield | 1.90% | 1.40% |
| Beta | 0.99 | 1.02 |
| AUM | $656.9 million | $13.9 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. Dividend yield is the trailing-12-month distribution yield.
The Morningstar-indexed fund is much more affordable, with an expense ratio of 0.06% compared to 0.24% for its Russell counterpart. Investors may also find ISCV more appealing for income, as it offered a higher distribution yield of 1.90% over the last year.
Performance & risk comparison
| Metric | ISCV | IWN |
|---|---|---|
| Max drawdown (5 yr) | (25.30%) | (26.70%) |
| Growth of $1,000 over 5 years (total return) | $1,372.00 | $1,369.00 |
What's inside
The iShares Russell 2000 Value ETF targets small-cap equities with value traits. Its portfolio lists 1,384 holdings. Its primary sector tilts include financial services at 24%, technology at 12%, and industrials at 11%. Its top positions include TTM Technologies Inc (NASDAQ:TTMI) at 1.21%, Echostar Corp (NASDAQ:SATS) at 1.02%, and Hut Corp (NASDAQ:HUT) at 0.80%. This ETF was launched in 2000 and has a trailing-12-month dividend of $3.09 per share.
The iShares Morningstar Small-Cap Value ETF tracks an index of 1,069 holdings and was launched in 2004. Its exposure focuses on financial services at 21%, consumer cyclical at 14%, and industrials at 12%. Largest positions include Akamai Technologies Inc (NASDAQ:AKAM) at 0.72%, TD Synnex Corp (NYSE:SNX) at 0.70%, and Alcoa Corp (NYSE:AA) at 0.68%. It has paid $1.41 per share over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Investing in value stocks was one of the strategies famed investor Warren Buffet was known for. Applying this approach to small-cap stocks can be challenging because of the sheer number of companies.
That’s where the iShares Morningstar Small-Cap Value ETF (ISCV) and iShares Russell 2000 Value ETF (IWN) can help. They provide an efficient way to gain exposure to a wide range of small-cap value stocks. But which is the better fund to invest in?
ISCV is ideal for cost-conscious investors, given the significantly lower expense ratio. It also delivers a higher dividend yield, which can be more appealing to income-oriented investors. This ETF uses metrics such as forward earnings, book value, sales, cash flow, and dividend yield to choose the stocks to include in its portfolio.
IWN is the better ETF for active traders, given its much larger AUM of about $14 billion compared to ISCV’s $656.9 million, which provides IWN with greater liquidity. The fund also offers a bit more diversity with its higher number of holdings compared to ISCV. Its massive AUM and popularity contributes to its ability to charge a premium fee of 0.24%.
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Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool recommends Akamai Technologies. The Motley Fool has a disclosure policy.
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