Small-Cap ETF Investing: ISCB vs. SPSM

By Sarah Sidlow – Mar 13, 2026 at 7:57AM ESTKey PointsISCB carries a slightly higher expense ratio and a lower dividend yield compared to SPSM.ISCB has delivered a higher one-year return and broader diversification, but with a deeper five-year drawdown.ISCB holds more companies and tilts toward industrials, while SPSM is more concentrated in financial services.State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM 1.88%) and iShares Morningstar Small-Cap ETF (ISCB 2.00%) both target U.S. small-cap stocks, but ISCB offers broader diversification and has outpaced SPSM over the past year, albeit with slightly higher costs.Both SPSM and ISCB aim to give investors exposure to U.S. small-cap equities, but they differ in how they construct their portfolios and in some important metrics. This comparison digs into cost, performance, risk, holdings, and trading considerations to help clarify which ETF may appeal more, depending on investor priorities.Snapshot (cost & size)MetricSPSMISCBIssuerSPDRiSharesExpense ratio0.03%0.04%1-yr return (as of 2026-03-11)20.76%23.03%Dividend yield1.6%1.4%Beta1.21.09AUM$13.8 billion$246.5 millionBeta 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.ISCB comes with a marginally higher expense ratio than SPSM, making SPSM slightly more affordable. SPSM also has a modest edge in dividend yield, which may appeal to investors seeking a higher payout from their small-cap allocation.Performance & risk comparisonMetricSPSMISCBMax drawdown (5 y)-27.95%-29.93%Growth of $1,000 over 5 years$1,095$1,138What's insideISCB tracks a broad set of U.S. small-cap stocks, holding 1,561 companies as of March 11, 2026. The fund tilts slightly toward industrials (20%), financial services (17%), and healthcare (14%). Its top holdings include Lumentum Holdings, CF Industries, ATI, and Albemarle, though none represent more than 1% of assets, highlighting the fund’s diversification.ExpandNYSEMKT: ISCBiShares Trust - iShares Morningstar Small-Cap ETFToday's Change(-2.00%) $-1.32Current Price$64.80Key Data PointsDay's Range$64.79 - $65.9252wk Range$46.59 - $70.45Volume8.9KIn contrast, SPSM focuses on the S&P SmallCap 600 index, which results in a portfolio of 603 holdings. It is slightly heavier in financial services (18%), with comparable weightings in industrials. Top names like Solstice Adv Materials, Interdigital, and CareTrust REIT each comprise less than 1% of the fund. Neither fund employs leverage or carries notable quirks, but SPSM’s more concentrated approach may lead to different sector exposures over time.ExpandNYSEMKT: SPSMSPDR Series Trust - State Street SPDR Portfolio S&P 600tm Small Cap ETFToday's Change(-1.88%) $-0.91Current Price$47.63Key Data PointsDay's Range$47.56 - $48.1152wk Range$34.79 - $52.04Volume53For more guidance on ETF investing, check out the full guide at this link.What this means for investorsInvesting in small-cap stocks provides an opportunity to capitalize on greater upside potential as these businesses grow. It can also be a good way to diversify a portfolio that already holds traditional large-cap stocks that may offer stability but slower growth. And investing via an exchange-traded fund means you don’t have to worry about backing the right small-cap stock — instead, you can focus on which small-cap investing strategy fits your style best.The matchup between ISCB and SPSM is a good example of this. SPSM is an index fund that seeks to track the S&P SmallCap 600 index. That means its holdings will always be limited to around 600 stocks that also comprise that index. To be included in the index, a stock must have a market cap between $1.2 billion and $8 billion and companies must have positive earnings over the most recent quarter as well as cumulatively over the most recent four quarters.ISCB holds more than twice as many stocks, but its total assets under management is just a fraction of SPSM’s. It tracks the Morningstar US Small Cap Extended Index, which has slightly different criteria for inclusion. One big difference is that there is no profitability requirement for inclusion in the Morningstar index. The two ETFs have performed pretty similarly over the last one and five years, offer similar dividend yields, and charge similar expense ratios. Choosing between the two will likely come down to which index criteria you prefer.Read NextFeb 16, 2026 •By Jake LerchSmall Cap ETFs: VB Boasts Lower Fees, While ISCB Sports a Higher Dividend YieldJan 17, 2026 •By Sarah SidlowSmall-Cap ETFs: ISCB Outperforms, but SPSM Yields MoreDec 21, 2025 •By Josh Kohn-LindquistWhich Small-Cap ETF Is Better: Vanguard's VB or iShares' ISCB?Dec 20, 2025 •By Sara AppinoSmall-Cap Showdown: IJR's $88 Billion in Assets vs. ISCB's 1,539-Stock PortfolioAbout the AuthorSarah Sidlow is a Motley Fool contributing analyst and copy editor giving context and clarity to buzzworthy market moves. She also writes about personal finance and insurance topics for Credit Karma. She has a B.A. in Journalism and Psychology from Miami University (OH) and a Master's in Journalism from Georgetown University.TMFSHSStocks MentionediShares Trust - iShares Morningstar Small-Cap ETFNYSEMKT: ISCB$64.80(-2.00%)-$1.32SPDR Series Trust - State Street SPDR Portfolio S&P 600tm Small Cap ETFNYSEMKT: SPSM$47.63(-1.88%)-$0.91*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.