Key Points
Schwab U.S. Small-Cap ETF provides significantly broader diversification with over 1,700 holdings compared to the 607 positions in State Street SPDR Portfolio S&P 600 Small Cap ETF.
State Street SPDR Portfolio S&P 600 Small Cap ETF carries a slightly lower expense ratio of 0.03% and a higher trailing-12-month distribution yield of 1.50%.
While Schwab U.S. Small-Cap ETF delivered a higher 1-year total return, it also experienced a deeper maximum drawdown over the last five years.
- 10 stocks we like better than Schwab Strategic Trust - Schwab U.s. Small-Cap ETF ›
The Schwab U.S. Small-Cap ETF (NYSEMKT:SCHA) offers broader diversification across more than 1,700 holdings, while the State Street SPDR Portfolio S&P 600 Small Cap ETF (NYSEMKT:SPSM) provides a leaner portfolio with slightly lower costs.
Both funds target the small-cap segment of the U.S. equity market but follow different index strategies. While the State Street fund focuses on the S&P SmallCap 600, the Schwab fund tracks the Dow Jones U.S. Small-Cap Total Stock Market Index, leading to differences in concentration and volatility.
Snapshot (cost & size)
| Metric | SPSM | SCHA |
|---|---|---|
| Issuer | SPDR | Schwab |
| Expense ratio | 0.03% | 0.04% |
| 1-yr return (as of April 27, 2026) | 38.70% | 44.10% |
| Dividend yield | 1.50% | 1.10% |
| Beta | 1.04 | 1.10 |
| AUM | $15.2 billion | $22.0 billion |
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 State Street fund is slightly more affordable with an expense ratio of 0.03%. Investors focused on income may also prefer its higher payout, as it offers a 1.50% trailing-12-month distribution yield compared to 1.10% for its peer.
Performance & risk comparison
| Metric | SPSM | SCHA |
|---|---|---|
| Max drawdown (5 yr) | (27.90%) | (30.80%) |
| Growth of $1,000 over 5 years (total return) | $1,324 | $1,334 |
The Schwab U.S. Small-Cap ETF focuses on the broader small-cap market, with sectors led by Technology at 18.00%, Financial Services at 16.00%, and Industrials at 16.00%. Its 1,728 holdings include large positions in SanDisk (NASDAQ:SNDK) at 3.23%, Lumentum Holdings (NASDAQ:LITE) at 1.39%, and Revolution Medicines (NASDAQ:RVMD) at 0.59%. This fund was launched in 2009, has ~$22.0 billion in assets under management (AUM), and has a trailing-12-month dividend of $0.34 per share.
In contrast, the State Street SPDR Portfolio S&P 600 Small Cap ETF targets a more concentrated group of 607 holdings. Its sector exposure tilts toward Industrials at 17.00%, Financial Services at 17.00%, and Technology at 16.00%, with top holdings including FormFactor (NASDAQ:FORM) at 0.61%, Viavi Solutions (NASDAQ:VIAV) at 0.58%, and Semtech (NASDAQ:SMTC) at 0.58%. The State Street fund was launched in 2013, manages ~$15.2 billion in AUM, and paid $0.77 per share over the trailing 12 months.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Small-cap stocks -- companies too small to crack the S&P 500 -- have historically outperformed large caps over long time horizons, but with a catch: The small-cap universe is littered with unprofitable, speculative companies that can drag returns down significantly. How a fund handles that reality is often what separates good small-cap exposure from great small-cap exposure.
SCHA takes the broadest possible approach, tracking roughly 1,700 small-cap stocks with no filter for profitability. If a company is small enough, it's in. SPSM is more selective, tracking the S&P SmallCap 600, which requires companies to demonstrate profitability before gaining admission. That quality gate has historically helped the S&P 600 avoid some of the worst small-cap blowups.
The real choice is philosophical: maximum breadth or a quality screen that weeds out the weakest names before they land in your portfolio. Investors who believe in owning the entire small-cap market -- profitable or not -- will find SCHA the purer expression of that conviction. Those who want small-cap exposure with a built-in layer of quality control will find SPSM the more disciplined choice.
Should you buy stock in Schwab Strategic Trust - Schwab U.s. Small-Cap ETF right now?
Before you buy stock in Schwab Strategic Trust - Schwab U.s. 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 Schwab Strategic Trust - Schwab U.s. 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 $497,606!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,306,846!*
Now, it’s worth noting Stock Advisor’s total average return is 985% — a market-crushing outperformance compared to 200% 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.
*Stock Advisor returns as of April 29, 2026.
Sara Appino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Lumentum and Viavi Solutions. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
