Which Small-Cap ETF Is the Better Buy: iShares' Growth-Focused IWO or Invesco's Revenue-Weighted RWJ?

The iShares Russell 2000 Growth ETF (NYSEMKT:IWO) provides broad, low-cost exposure to small-cap growth stocks, while the Invesco S&P SmallCap 600 Revenue ETF (NYSEMKT:RZG) uses a concentrated, revenue-weighted methodology.

Investors seeking the high-growth potential of smaller companies often compare these two funds. While both target the small-cap segment, their differing index strategies and portfolio densities create unique risk-reward profiles. This analysis examines how their costs, historical performance, and underlying holdings differ as of Aug. 10, 2026.

Snapshot (cost & size)

Beta measures price volatility relative to the S&P 500; beta is calculated from monthly returns over the available fund history (up to five years). The 1-yr return represents total return over the trailing 12 months. Dividend yield is the trailing-12-month distribution yield.

The iShares Russell 2000 Growth ETF is the more affordable option with an expense ratio of 0.24%, compared to 0.35% for the Invesco fund. Both ETFs currently offer an identical trailing-12-month dividend yield of 0.4%.

Performance & risk comparison

What's inside

The iShares Russell 2000 Growth ETF tracks a broad index of small-cap companies displaying strong growth traits. Its sector exposure is led by healthcare at 29%, technology at 21%, and industrials at 15%. With 1,106 holdings, the portfolio is highly diversified; its largest positions include Moog (NYSE:MOGA) at 0.70%, Glaukos (NYSE:GKOS) at 0.63%, and Brightspring Health Services (NASDAQ:BTSG) at 0.62%. This ETF was launched in 2000. It has paid $1.64 per share over the trailing 12 months, which on its recent ~$388.02 share price works out to a 0.4% yield.

The Invesco S&P SmallCap 600 Revenue ETF weights its holdings by revenue rather than market capitalization, focusing on a subset of the S&P SmallCap 600 Index. It is more concentrated with 127 holdings, emphasizing healthcare at 23%, industrials at 17%, and financial services at 16%. Top holdings include ACM Research (NASDAQ:ACMR) at 2.47%, Protagonist Therapeutics (NASDAQ:PTGX) at 1.86%, and Acadian Asset Management (NYSE:AAMI) at 1.71%. The Invesco fund was launched in 2006. It has paid $0.30 per share over the trailing 12 months, which on its recent ~$69.63 share price works out to a 0.4% yield.

For more guidance on ETF investing, check out the full guide at this link.

Which looks like the better buy

Small-cap stocks are definitely having a moment. The Russell 2000 has surged roughly 41% over the past year, strongly outperforming the S&P 500 as investors bet that an AI-driven productivity boom will lift smaller, domestically focused companies alongside the megacap giants. For investors who want a piece of that rally, IWO and RWJ are both smart choices.

IWO tracks the Russell 2000 Growth Index, holding more than 1,100 small-cap companies selected for their growth characteristics. That breadth includes companies that are not yet profitable, a feature that amplifies upside in strong markets but can accelerate losses when sentiment turns. If that volatility gives you pause, RWJ is the more grounded option, weighting its holdings by revenue rather than market cap or growth metrics. That naturally tilts the portfolio toward companies with real, proven business momentum rather than those trading on future promise alone.

IWO costs less and has been one of the cleaner ways to ride the small-cap rally of the past year. For most investors, that combination of lower cost and broad exposure makes it the more practical starting point. RWJ is worth a closer look for those who believe revenue-weighted small caps will outperform pure growth names over the next cycle. It’s a reasonable bet if the current momentum eventually gives way to a more fundamentals-driven market.

Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Moog. The Motley Fool recommends Protagonist Therapeutics. The Motley Fool has a disclosure policy.