Key Points
The State Street SPDR Portfolio S&P 600 Small Cap ETF and Vanguard Small-Cap ETF both charge an identical 0.03% expense ratio.
The State Street SPDR Portfolio S&P 600 Small Cap ETF has delivered a higher trailing-12-month dividend yield than the Vanguard Small-Cap ETF.
The Vanguard Small-Cap ETF provides more extensive diversification with 1,357 holdings compared to 607 for the State Street fund.
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The State Street SPDR Portfolio S&P 600 Small Cap ETF (NYSEMKT:SPSM) offers a higher yield and different index methodology than the Vanguard Small-Cap ETF (NYSEMKT:VB), which provides broader exposure through a larger basket of stocks.
Small-cap stocks can provide the engine for long-term portfolio growth, though they may experience more significant price swings than large-cap peers. These two funds represent some of the most efficient ways to access the asset class, with the Vanguard fund commanding significantly more assets under management (AUM) than the SPDR alternative.
Snapshot (cost & size)
| Metric | VB | SPSM |
|---|---|---|
| Issuer | Vanguard | SPDR |
| Expense ratio | 0.03% | 0.03% |
| 1-yr return (as of April 27, 2026) | 33.90% | 38.70% |
| Dividend yield | 1.20% | 1.50% |
| Beta | 1.06 | 1.04 |
| AUM | $164.6 billion | $15.2 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.
Both the Vanguard fund and the State Street fund are among the most affordable ETFs in the category, each charging a 0.03% expense ratio. While costs are identical, the State Street fund currently offers a slightly higher income profile with its 1.50% trailing-12-month dividend yield.
Performance & risk comparison
| Metric | VB | SPSM |
|---|---|---|
| Max drawdown (5 yr) | (28.20%) | (27.90%) |
| Growth of $1,000 over 5 years (total return) | $1,353 | $1,324 |
What's inside
The State Street SPDR Portfolio S&P 600 Small Cap ETF (SPSM) seeks to provide investment results that correspond to the S&P SmallCap 600 Index. This specific index requires companies to be profitable for inclusion, which results in a curated portfolio of 607 stocks. Its largest positions currently include FormFactor (NASDAQ:FORM) at 0.61%, Viavi Solutions (NASDAQ:VIAV) at 0.58%, and Semtech (NASDAQ:SMTC) at 0.58%. The portfolio maintains a balanced focus on Industrials at 17%, Financial Services at 17%, and Technology at 16%. Launched in 2013, the State Street fund has paid $0.77 per share over the trailing 12 months.
The Vanguard Small-Cap ETF (VB) tracks the CRSP US Small Cap Index using a passively managed, full-replication approach. It provides much broader diversification than its competitor, containing a total of 1,357 holdings. Its largest positions include EMCOR Group (NYSE:EME) at 0.45%, NRG Energy (NYSE:NRG) at 0.42%, and Atmos Energy (NYSE:ATO) at 0.42%. The Vanguard fund concentrates its weights in Industrials at 20%, Technology at 16%, and Financial Services at 13%. It was launched in 2004 and has a trailing-12-month dividend of $3.50 per share.
For more guidance on ETF investing, check out the full guide at this link.
What this means for investors
Adding small-cap stocks to your portfolio is a good way to gain exposure to fast growing companies. Vanguard’s VB and State Street’s SPSM provide a low-cost means of achieving this aim. Choosing between these two ETFs comes down to a few factors.
VB delivers far greater diversification with its more than 1,000 stocks compared to SPSM’s 607, and higher liquidity given its much larger AUM. This makes it a compelling choice for active traders or those seeking broad-based small cap exposure.
However, because VB’s holdings are broad, you are exposed to companies that may not be profitable. This means the fund has more volatility and risk than SPSM, as demonstrated by its slightly higher beta and max drawdown. The ETF’s heavy concentration of 20% in Industrials helps to mitigate some of that as the sector is less volatile than industries such as technology.
SPSM is more balanced in terms of sector allocation, and it applies a quality filter to target only companies with profits. This arguably provides a higher level of quality than VB, as evidenced in its superior one-year return and slightly higher dividend yield. It’s a good choice for investors who prefer lower volatility and risk, as well as a better yield for passive income.
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Robert Izquierdo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends EMCOR Group 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.
