Small-Cap ETF Comparison
The iShares Core S&P Small Cap ETF (IJR +0.55%) serves as a significant, highly liquid option for those looking to invest in small-cap stocks. On the other hand, the iShares Morningstar Small Cap ETF (ISCB +0.65%) offers broader diversification at more modest prices.
Small-cap stocks can deliver greater growth potential compared to their large-cap counterparts, although they also tend to exhibit higher price volatility. While both ETFs focus on this segment, their criteria for selection and overall portfolio composition vary, which affects their respective risk-reward profiles.
Cost and Size Snapshot
| Metric | ISCB | IJR |
|---|---|---|
| Publisher | iShares | iShares |
| Expense Ratio | 0.04% | 0.06% |
| 1-Year Return (as of May 7, 2026) | 34.1% | 37.1% |
| Dividend Yield | 1.3% | 1.2% |
| Assets Under Management | $270.6 million | $102.9 billion |
Beta indicates the price volatility relative to the S&P 500, based on five years of monthly returns. The one-year return reflects total returns anticipated for the next 12 months, while dividend yield represents the trailing 12-month distribution yield.
For cost-conscious investors, ISCB might be more appealing due to its lower expense ratio of 0.04%, compared to IJR’s 0.06%. The dividend yield is quite close, with ISCB offering slightly more at 1.3% against IJR’s 1.2%.
Performance and Risk Comparison
| Metric | ISCB | IJR |
|---|---|---|
| Maximum Drawdown (5 years) | (29.9%) | (28.0%) |
| $1,000 Growth in 5 years (Total Return) | $1,304 | $1,320 |
Portfolio Composition
The iShares Core S&P Small Cap ETF primarily invests in 640 holdings, with sectors like financial services (16%), industrials (16%), and technology (15%) leading the way. Notable companies include Viavi Solutions (VIAV +0.31%) at 0.74%, Sanmina (SANM +4.75%) at 0.71%, and FormFactor (FORM +2.21%) at 0.66%. This fund was established in 2000 and has paid $1.60 per share over the last year.
In contrast, the iShares Morningstar Small Cap ETF tracks a broader universe of 1,548 holdings with a higher focus on industrials (18%), financial services (16%), and healthcare (14%). Its leading assets include Lumentum Holdings (LITE +1.26%) at 1.16%, Revolution Medicines (RVMD 0.49%) at 0.45%, and Sterling Infrastructure (STRL +4.06%) at 0.40%. Launched in 2004, it has a trailing 12-month dividend of $0.92 per share.
Implications for Investors
Both the iShares Core S&P Small Cap ETF (IJR) and the iShares Morningstar Small Cap ETF (ISCB) provide efficient routes for investors aiming to include small and medium-sized enterprises in their portfolios. Your choice will hinge on what factors matter most to you.
IJR operates with a quality filter that favors companies with positive earnings, which can generally withstand economic challenges better—hence its lower maximum drawdowns.
Another point to consider is that IJR has significantly higher assets under management, which translates to better liquidity. Active traders might find this feature advantageous. Still, because IJR follows strict quality filters, it holds fewer stocks, leading to reduced diversification, alongside a higher expense ratio than ISCB. For those focusing on risk minimization, IJR could be more suitable.
ISCB, with its 1,500+ holdings, offers extensive exposure to small-cap investments. This breadth can help maintain stability during industry downturns or poor stock performances. However, this also means it includes companies that may not yet be profitable, which adds a layer of volatility and risk, reflected in its higher beta values and maximum drawdowns. So, for investors looking for a broader, more cost-effective entry into small-cap stocks, ISCB might be the better option.
