iShares Small Cap ETF Showdown: IJR vs. ISCB
Key Points
The iShares Core S&P Small-Cap ETF manages significantly more assets under management than the iShares Morningstar Small-Cap ETF.
The iShares Morningstar Small-Cap ETF offers a slightly lower expense ratio and a higher dividend yield than the iShares Core S&P Small-Cap ETF.
Both funds focus on small-cap equities but iShares Morningstar Small-Cap ETF holds more than double the number of stocks found in iShares Core S&P Small-Cap ETF.
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The iShares Core S&P Small-Cap ETF (NYSEMKT:IJR) provides a highly liquid, massive asset base for small-cap exposure, while the iShares Morningstar Small-Cap ETF (NYSEMKT:ISCB) offers a lower price tag and broader diversification.
Small-cap stocks often provide higher growth potential than large-cap peers, though they typically come with increased price swings. While both exchange-traded funds (ETFs) focus on this corner of the market, they differ in their selection criteria and portfolio depth, influencing their risk and return profiles.
Snapshot (cost & size)
| Metric | ISCB | IJR |
|---|---|---|
| Issuer | iShares | iShares |
| Expense ratio | 0.04% | 0.06% |
| 1-yr return (as of May 7, 2026) | 34.1% | 37.1% |
| Dividend yield | 1.3% | 1.2% |
| Beta | 1.07 | 1.04 |
| AUM | $270.6 million | $102.9 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.
Investors prioritizing low costs may prefer ISCB, which carries a lower 0.04% expense ratio compared to 0.06% for IJR. The yield difference is narrow, with ISCB offering a slightly higher distribution payout of 1.3% versus 1.2%.
Performance & risk comparison
| Metric | ISCB | IJR |
|---|---|---|
| Max drawdown (5 yr) | (29.9%) | (28.0%) |
| Growth of $1,000 over 5 years (total return) | $1,304 | $1,320 |
What's inside
The iShares Core S&P Small-Cap ETF focuses on 640 holdings across financial services (16%), industrials (16%), and technology (15%). Its largest positions include Viavi Solutions (NASDAQ:VIAV) at 0.74%, Sanmina (NASDAQ:SANM) at 0.71%, and Formfactor (NASDAQ:FORM) at 0.66%. Launched in 2000, it has paid $1.60 per share over the trailing 12 months.
Conversely, the iShares Morningstar Small-Cap ETF tracks a broader index of 1,548 holdings, led by industrials (18%), financial services (16%), and healthcare (14%). Top holdings include Lumentum Holdings (NASDAQ:LITE) at 1.16%, Revolution Medicines (NASDAQ:RVMD) at 0.45%, and Sterling Infrastructure (NASDAQ:STRL) at 0.40%. Launched in 2004, it has a trailing-12-month dividend of $0.92 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
The iShares Core S&P Small-Cap ETF (IJR) and iShares Morningstar Small-Cap ETF (ISCB) provide investors with an efficient way to add smaller companies to an investment portfolio. Deciding which one to choose depends on the factors that matter most to you.
With IJR, a quality filter is applied that requires companies to have positive earnings. This factor contributed to a lower max drawdown, as businesses with healthy financials tend to be more resilient during downturns.
Another key difference is IJR’s far greater AUM, which grants it high liquidity. Active traders may find this trait to be beneficial. However, IJR’s quality filter leads to it having fewer holdings, making it less diversified compared to ISCB, and its expense ratio is higher. Investors who want to limit their risk may find IJR the better choice.
ISCB’s more than 1,500 holdings provide broad exposure to the small-cap universe. This helps the fund remain resilient to downturns in a given sector or set of stocks. On the flip side, the ETF includes unprofitable businesses, which can add to volatility and risk as demonstrated by its higher max drawdown and beta. ISCB is the better choice for those who want a fund offering broader, lower-cost diversification in small-cap stocks.
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Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lumentum, Sterling Infrastructure, Viavi Solutions, and iShares Core S&P Small-Cap ETF. The Motley Fool has a disclosure policy.
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