ISCB vs. SCHA: Which Small-Cap ETF Should You Buy in 2026?
Key Points
The Schwab U.S. Small-Cap ETF (SCHA) manages significantly more assets and carries a lower expense ratio than iShares Morningstar Small-Cap ETF (ISCB).
The Morningstar ETF provides a higher dividend yield but trailed in total returns over the last 12 months.
The Schwab ETF leans heavily into technology, whereas Morningstar prioritizes more weight in industrials.
- 10 stocks we like better than iShares Trust - iShares Morningstar Small-Cap ETF ›
The iShares Morningstar Small-Cap ETF (NYSEMKT:ISCB) offers a higher dividend yield and heavier weighting toward industrial firms, while the Schwab U.S. Small-Cap ETF (NYSEMKT:SCHA) provides lower costs and significantly greater liquidity.
The iShares fund and the Schwab fund both target the U.S. small-cap market, providing investors with broad exposure to companies outside the S&P 500. This comparison evaluates how their differing methodologies impact sector concentrations, liquidity, and overall return profiles for long-term holders as of July 10, 2026.
Snapshot (cost & size)
| Metric | SCHA | ISCB |
|---|---|---|
| Issuer | Schwab | iShares |
| Share price | $34.91 (as of 2026-07-10) | $74.47 (as of 2026-07-10) |
| Expense ratio | 0.03% | 0.04% |
| 1-yr return (as of 2026-07-10) | 34.7% | 25.0% |
| Dividend yield | 1.0% | 1.3% |
| Beta | 1.21 | 1.12 |
| AUM | $23.3B | $282.9M |
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 Schwab fund is the more affordable option with a 0.03% expense ratio. However, income-seeking investors may prefer the higher payout of the iShares fund, which offers a 1.3% dividend yield versus 1.0% for its Schwab counterpart.
Performance & risk comparison
| Metric | SCHA | ISCB |
|---|---|---|
| Max drawdown (5 yr) | (30.8%) | (29.9%) |
| Growth of $1,000 over 5 years (total return) | $1,452 | $1,383 |
What's inside
ISCB is designed to mirror the market performance of a benchmark comprising U.S. small-cap stocks. Its portfolio of 1,580 holdings is primarily focused on industrials (18%), technology (16%), and financial services (16%). Its largest positions include Okta at 0.37%, Sterling Infrastructure at 0.33%, and Guardant Health at 0.32%. The fund was launched in 2004.
The iShares Morningstar Small-Cap ETF has paid $0.95 per share over the trailing 12 months. At its recent $74 share price, it works out to a 1.3% yield.
SCHA seeks to replicate the Dow Jones U.S. Small-Cap Total Stock Market Index. It holds 1,725 stocks, with significant weightings in technology (22%), healthcare (16%), and financial services (15%). Its top holdings include Sandisk at 5.79%, Lumentum Holdings at 1.27%, and Revolution Medicines at 0.76%. The fund was launched in 2009.
The Schwab U.S. Small-Cap ETF has paid $0.36 per share over the trailing 12 months. At its recent $35 share price, it works out to a 1.0% yield.
For more guidance on ETF investing, check out the full guide at this link.
Which small-cap ETF is the better buy?
The better small-cap ETF isn’t necessarily the better-performing one. Schwab has delivered marginally better returns over the last five years, but that may reflect its recent heavier allocation to technology than the Morningstar ETF.
Investors who already have tech exposure through a large index fund or individual stock holdings may benefit from Morningstar’s heavier allocation to industrials — its largest sector allocation. The reindustrialization of the U.S. economy is a megatrend that could boost this fund’s returns in the coming years.
But these are both solid small-cap ETFs. A broader investor rotation into small-cap stocks will be a tailwind for both SCHA and ISCB. Both SCHA and ISCB have outperformed the S&P 500 over the last year. Assuming that relative strength continues, the better buy is the one that provides broader diversification across sectors for an investor’s portfolio.
Should you buy stock in iShares Trust - iShares Morningstar Small-Cap ETF right now?
Before you buy stock in iShares Trust - iShares Morningstar Small-Cap ETF, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and iShares Trust - iShares Morningstar Small-Cap ETF wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $396,542!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,299,961!*
Now, it’s worth noting Stock Advisor’s total average return is 931% — a market-crushing outperformance compared to 210% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of July 16, 2026.
John Ballard has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Guardant Health, Lumentum, Okta, and Sterling Infrastructure. The Motley Fool has a disclosure policy.
Recommended Articles
