What are the best Small-Cap Stocks ETFs?
5 min read
By Ron Koren, ETF Insider

What are the best Small-Cap Stocks ETFs?

In the world of investing, small-cap stocks have gained attention for their potential growth and opportunities. For those looking to diversify their portfolio with small-cap stocks, Small-Cap Stocks ETFs can offer a convenient and efficient way to gain exposure to this market segment. This article explores some of the best Small-Cap Stocks ETFs available, providing investors with valuable insights and options to consider.

Small-Cap Stocks ETFs: An Overview

Small-cap stocks offer investors the potential for higher returns compared to large-cap stocks due to their growth prospects and lower market capitalization. Investing in individual small-cap stocks can be risky and time-consuming, but Exchange-Traded Funds (ETFs) provide a convenient way to gain exposure to a diversified portfolio of small-cap stocks. By investing in small-cap stocks ETFs, investors can access a broad range of companies and potentially benefit from their growth. One noteworthy ETF in this category is the iShares Russell 2000 ETF (Ticker: IWM), which we will compare to other similar small-cap stocks ETFs.

Comparing IWM to Similar Small-Cap Stocks ETFs

When looking for the best small-cap stocks ETFs, it's essential to consider factors such as expense ratio, performance, portfolio composition, and fund size. The iShares Russell 2000 ETF (IWM) is a standout ETF in this category. It aims to track the performance of an index that includes small-cap U.S. stocks, providing investors with exposure to a diversified basket of companies. With a low expense ratio and strong historical performance, IWM has attracted the attention of investors seeking small-cap stock exposure. However, there are other notable small-cap stocks ETFs to consider, such as Vanguard Small-Cap ETF (VB), SPDR S&P 600 Small Cap ETF (SLY), and Schwab U.S. Small-Cap ETF (SCHA), which offer slightly different approaches to small-cap stock investing.

SLY overlap What are the best Small-Cap Stocks ETFs?SLY overlap What are the best Small-Cap Stocks ETFs?

Exploring the Benefits of Small-Cap Stocks ETFs

Investing in small-cap stocks ETFs can offer several advantages for investors. Firstly, these ETFs provide diversification by including a range of small-cap companies across various industries. This diversification helps reduce risk compared to investing in individual small-cap stocks. Additionally, small-cap stocks ETFs can provide exposure to potentially high-growth companies that have yet to reach their full potential. These companies often have the ability to outperform larger, more established companies. Investors interested in tapping into the growth potential of small-cap stocks may find small-cap stocks ETFs to be a suitable investment option.

Considerations for Investing in Small-Cap Stocks ETFs

While small-cap stocks ETFs offer potential benefits, it's important for investors to consider a few key factors. Firstly, small-cap stocks are generally more volatile than large-cap stocks, so investors should be prepared for potential fluctuations in value. Secondly, investors should assess the expense ratio and trading costs associated with the ETFs they consider. Lower expenses can have a positive impact on long-term returns. Lastly, investors should review the underlying index methodology and the ETF's portfolio composition to ensure it aligns with their investment objectives.


Small-cap stocks ETFs can be an attractive investment option for investors looking to gain exposure to the potential growth of small-cap companies. The iShares Russell 2000 ETF (IWM) stands out as an excellent choice in this category, with its low expense ratio, historical performance, and diversified portfolio of small-cap stocks. However, investors should carefully consider their investment goals, risk tolerance, and the specific features of each ETF before making an investment decision.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It is important to conduct thorough research and consider individual investment objectives before making any investment decisions. We are not providing any investment advisory services.


Get started
IWM ETF issuer
IWM ETF official page


  • What are Small-Cap Stocks ETFs?

    Small-Cap Stocks ETFs are exchange-traded funds that focus on investing in companies with relatively small market capitalizations. These ETFs provide exposure to the stocks of smaller companies, which are typically defined as having a market capitalization below a certain threshold.

  • What are the advantages of investing in Small-Cap Stocks ETFs?

    Investing in Small-Cap Stocks ETFs can offer several advantages. Small-cap companies have the potential for higher growth compared to larger, more established companies. These ETFs provide diversification across a basket of small-cap stocks, reducing individual company risk. Additionally, Small-Cap Stocks ETFs offer liquidity, transparency, and can be a cost-effective way to gain exposure to this segment of the market.

  • What factors should I consider when choosing Small-Cap Stocks ETFs?

    When selecting Small-Cap Stocks ETFs, it's important to consider factors such as the ETF's expense ratio, tracking error, trading volume, and underlying index methodology. Additionally, evaluating the ETF's historical performance, holdings, sector allocation, and the fund manager's expertise can provide valuable insights.

  • What are some popular Small-Cap Stocks ETFs?

    Some popular Small-Cap Stocks ETFs include the iShares Russell 2000 ETF (IWM), Vanguard Small-Cap ETF (VB), SPDR S&P 600 Small Cap ETF (SLY), Schwab U.S. Small-Cap ETF (SCHA), and Invesco S&P SmallCap 600 ETF (PSC).

  • How can I invest in Small-Cap Stocks ETFs?

    To invest in Small-Cap Stocks ETFs, you can open an account with a brokerage firm that offers access to ETFs. Online brokerage accounts are commonly used for this purpose. Once you have an account, you can search for the desired Small-Cap Stocks ETFs by their ticker symbols and place buy orders through the brokerage platform.