ISCV vs. IWN: Which Small-Cap Value ETF Is the Better Buy?
Key Points
The iShares Morningstar Small-Cap Value ETF (ISCV) carries a lower expense ratio of 0.06% compared to 0.24% for the iShares Russell 2000 Value ETF (IWN).
ISCV's 1.88% dividend yield is higher than IWN's 1.45%.
Over the past five years, both funds had similar maximum drawdowns and total returns.
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While both funds target smaller U.S. companies that appear undervalued relative to the broader market, the iShares Morningstar Small-Cap Value ETF (NYSEMKT:ISCV) provides that exposure to the small-cap value space at a lower cost than the iShares Russell 2000 Value ETF (NYSEMKT:IWN).
Snapshot (cost & size)
| Metric | ISCV | IWN |
|---|---|---|
| Issuer | iShares | iShares |
| Expense ratio | 0.06% | 0.24% |
| 1-year return (as of June 19, 2026) | 30.01% | 43.66% |
| Dividend yield | 1.88% | 1.45% |
| Beta | 1.08 | 1.12 |
| AUM | $658.8 million | $14.0 billion |
Beta measures price volatility relative to the S&P 500; beta is calculated from five-year monthly returns. The 1-year return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.
ISCV is the cheaper option, with a 0.06% expense ratio compared to IWN’s 0.24%. Additionally, ISCV provides a higher payout, with a 1.88% dividend yield vs. IWN’s 1.45%.
Performance & risk comparison
| Metric | ISCV | IWN |
|---|---|---|
| Max drawdown (5 yr) | (25.34%) | (26.70%) |
| Growth of $1,000 over 5 years (total return) | $1,442 | $1,437 |
Launched in 2000, IWN seeks to provide exposure to the value segment of the Russell 2000 Index. With 1,382 total holdings, the ETF focuses on sectors like financial services (23.9%), industrials (12.1%), and technology (11.6%). Top positions include TTM Technologies (NASDAQ:TTMI) at 1.1%, EchoStar (NASDAQ:SATS) at 1.1%, and Hut 8 (NASDAQ:HUT) at 0.8%.
In contrast, ISCV tracks a different index of small-cap value stocks and maintains roughly 1,060 holdings. Its sector concentrations include financial services (20.7%), consumer cyclical (13.5%), and industrials (12.7%). Its largest positions include TD SYNNEX (NYSE:SNX) at 0.7%, Viatris (NASDAQ:VTRS) at 0.6%, and Moderna (NASDAQ:MRNA) at 0.5%. The fund has been operating since 2004.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Small-cap value stocks have long held a special place in the portfolios of long-term investors -- and for good reason. Decades of academic research suggest that smaller companies trading at cheap valuations have historically outperformed the broader market over full market cycles, even if the ride can be bumpy along the way.
One obvious factor stands out when comparing these two funds. ISCV's expense ratio of 0.06% is much lower than IWN’s 0.24%. All else being equal, over a long holding period, that cost advantage can compound into a meaningful difference in net returns. For the buy-and-hold investor who rarely trades and wants to keep fees as low as possible, ISCV's lower fees are hard to argue with. And investors also get a higher dividend yield with ISCV to boot.
Both funds look similar on other measures, including maximum drawdowns and total returns over the last five years. And both ETFs will provide useful exposure to a corner of the market that tends to get overlooked when mega-cap tech stocks dominate the headlines. In a market environment where valuations remain stretched in many growth-focused segments, a tilt toward undervalued small caps could be a sensible diversifier for patient investors with a longer time horizon.
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Andy Gould has positions in Hut 8 and Moderna. The Motley Fool has positions in and recommends Moderna. The Motley Fool has a disclosure policy.
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