State Street SPDR Small Cap ETF Outpaces iShares on Returns
Key Points
State Street SPDR Portfolio S&P 600 Small Cap ETF is considerably larger and than iShares Morningstar Small-Cap ETF.
iShares' ETF holds over 1,500 stocks, providing more than double the individual holdings of the State Street fund.
The SPDR ETF has delivered higher one-year total returns and slightly better risk-adjusted growth.
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Comparing State Street SPDR Portfolio S&P 600 Small Cap ETF (NYSEMKT:SPSM) and iShares Morningstar Small-Cap ETF (NYSEMKT:ISCB) reveals a trade-off between the better recent performance of State Street fund and the much broader portfolio diversification offered by iShares.
Both funds provide core exposure to the U.S. small-cap market, yet they follow different indexing strategies. While the State Street fund focuses on a more curated list of 600 stocks, the iShares ETF casts a wider net, capturing over 1,500 companies within a similar sector framework.
Snapshot (cost & size)
| Metric | SPSM | ISCB |
|---|---|---|
| Issuer | SPDR | iShares |
| Share price (as of June 26, 2026) | $57.30 | $74.93 |
| Expense ratio | 0.03% | 0.04% |
| 1-yr return (as of June 26, 2026)) | 36.9% | 30.7% |
| Dividend yield | 1.4% | 1.3% |
| Beta | 0.99 | 1.03 |
| AUM | $16.9 billion | $285 million |
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 funds’ expense ratios are basically the same (1 basis point doesn’t seem worth quibbling over). SPSM offers a slightly higher dividend yield of 1.4% versus 1.3% for ISCB.
Performance & risk comparison
| Metric | SPSM | ISCB |
|---|---|---|
| Max drawdown (5 yr) | (27.9%) | (29.9%) |
| Growth of $1,000 over 5 years (total return) | $1,403 | $1,360 |
What's inside
The iShares ETF tracks a broad benchmark of smaller U.S. companies, holding 1,586 securities. Its sector allocation is led by industrials at 18%, followed by technology at 16%, and financial services at 16%. Its largest positions include Sterling Infrastructure (NASDAQ:STRL) at 0.38%, Okta (NASDAQ:OKTA) at 0.33%, and Guardant Health (NASDAQ:GH) at 0.3%. The fund was launched in 2004. The ETF has paid $0.95 per share in dividends over the trailing 12 months, which on its recent ~$75 share price works out to a 1.3% yield.
The SPDR fund targets the S&P SmallCap 600 Index, holding 607 stocks. Its top sectors are technology at 17%, financial services at 17%, and industrials at 15%. Its largest positions include Formfactor (NASDAQ:FORM) at 0.64%, Molina Healthcare (NYSE:MOH) at 0.62%, and Brightspring Health Services (NASDAQ:BTSG) at 0.61%. The fund was launched in 2013. The ETF has paid $0.79 per share in dividends over the trailing 12 months, which on its recent ~$57 share price works out to a 1.4% yield.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
These two small-cap specialists have basically identical expense ratios, so I'm going to set that aside; it's not really relevant to this analysis.
ISCB is extremely diversified, holding more than twice as many stocks as its counterpart. That said, SPSM is not at all concentrated; no holding even approaches a 1% weighting in the portfolio. The iShares ETF is also very small relative to its SPDR counterpart, with assets under management of $285 million. Accordingly, it has very low average trading volume, and that type of limited liquidity may be a concern for some investors.
Finally, SPSM has posted better recent returns than ISCB. Past performance is no guarantee of future results, of course, but it's one more thing that tips the scale in favor of the SPDR ETF.
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Erin Kennedy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Guardant Health, Okta, and Sterling Infrastructure. The Motley Fool has a disclosure policy.
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